Comment: Branson sitting pretty but what about RBS staff?
Sir Richard Branson does not enjoy the same level of popularity in certain business circles as he does among the wider populace, but just now he seems to be the man that everyone is turning to.
The Virgin founder has been largely vindicated over the west coast rail line debacle, with the Department for Transport being forced to hand back the keys for up to 13 months.
Now he seems to be in the box seat as Royal Bank of Scotland puts its 316 branches on parade for a re-run of the latest aborted transfer of undertakings. Branson sees the addition of 1.8 million customers and 250,000 business accounts as a tasty way of bulking up his nascent Virgin Money venture into something with real scale.
But price will pay a huge part in the process and with few of the earlier bidders willing or able to make a revised offer, then it looks like Branson can afford a take-it-or-leave-it approach to RBS.
He certainly prefers patience to over-paying and it seems to be working in his favour. His £4.8 billion bid to retain the west coast route was £700 million below FirstGroup’s offer, having refused to match the bid because he felt there was a risk of bankruptcy.
Commentators said he got a bargain when he bought the collapsed Northern Rock from the Treasury and it looks like he could pick up the 316 RBS branches and small firms business for considerably less than the £1.65bn that Santander agreed to pay in August 2010. Since that time, economic conditions have weakened, taking the book value of the business down with it.
The Santander decision is a blow for RBS, which has to find another buyer for a business it never wanted to sell in the first place. Despite Santander’s claim that the IT systems were not ready to be integrated, RBS has spent heavily on separating out functions and said it was almost ready to go live. It will also lose on the proceeds, an estimated £350m of capital, according to one analyst.
The bank will consult the European authorities over what happens next; whether it can get an extension to next year’s deadline, or if the whole process should be called off as circumstances have changed considerably since the sale was demanded in 2009 as a condition of receiving bail-out funds from the state. As a standalone business has been carved out of RBS, it could yet be floated on the stock market.
The deal is positive for Santander as there are strong suspicions that the deteriorating Spanish economy and recent downgrading of ratings in the past year would have put enormous strain on the bank’s ability to make the deal stack up. But it also leaves it without a piece of business that would have been factored into its own plans to float its UK business.
At some point, someone will need to give a thought to the customers who must be wondering who they will be banking with in a year’s time and to the 5,000 RBS employees working in this business who want to know who their boss will be.
ATH Resources needs quick fix as jobs on line
Scotland’s deep coal mines are a memory, and now there is a question over the future of the open-cast operations that remain.
ATH Resources is in trouble as a result of a slump in the international coal price and shareholders will be the first to be hit.
The warning signs have been there for some time and without an early solution jobs will be next.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Wednesday 19 June 2013
Temperature: 9 C to 18 C
Wind Speed: 16 mph
Wind direction: West
Temperature: 12 C to 20 C
Wind Speed: 8 mph
Wind direction: East