Nationwide pulls out of bidding for RBS branches

RBS has a hefty fine to pay as a result of the interbank lending rate scandal. Picture: Getty
RBS has a hefty fine to pay as a result of the interbank lending rate scandal. Picture: Getty
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Nationwide has ruled itself out of the race to acquire 316 branches being sold by Royal Bank of Scotland, but Sir Richard Branson’s Virgin Money and US private equity firm JC Flowers have submitted initial offers.

The UK’s largest building society had been expected to make an offer for the branches, which have 1.8 million retail customers and 240,000 small business accounts, after chief executive Graham Beale said last month that he was seeking to accelerate its push into the SME sector and would be watching developments at RBS “very carefully”.

However, a spokesman for the group said it had decided against making an acquisition and would instead pursue an organic growth strategy for its business banking operations.

JC Flowers and Edinburgh-based Virgin Money both declined to comment yesterday but it is understood the two firms have lodged non-binding first-round bids with investment bank UBS, which is advising RBS on the sale process.

RBS had previously agreed to sell the branches to Santander UK but the Spanish-owned bank, which bought Abbey National in 2004, pulled out of the £1.65 billion deal in October following lengthy talks about separating the assets into a largely stand-alone business.

The state-backed lender is being forced to sell 311 RBS branches in England and Wales and five NatWest outlets in Scotland in return for receiving UK government aid during the financial crisis four years ago.

Virgin Money bought failed lender Northern Rock earlier this year and recently said it is on track to have five million customers by Christmas, up from three million a year ago.

JC Flowers focuses on the financial services sector and has a presence in the UK through OneSavings Bank, which was formed when it took control of Kent Reliance Building Society.