* Bidders still awaiting response to proposals-sources
* Bidders had expected shortlist or preferred bidder in Jan
* RBS could take up to 6 months to make decision - sources
* Branch sale to Santander collapsed in October
By Laura Noonan and Matt Scuffham
LONDON, Jan 30 Bidders for hundreds of branches
being sold by Royal Bank of Scotland submitted their
offers six weeks ago, hoping for a response by the middle of
this month. They're still waiting.
Two sources close to the process said part-nationalised RBS
had given bidders for the 316 branches no substantial feedback
since offers were submitted in mid-December, even though they
had initially been told the field would be narrowed to a short
list or a preferred bidder by mid-January.
One of the sources said bidders had been told informally in
mid January that it would be "at least February" before RBS gave
any update on their offers and no due diligence or other work
was in train.
The delay represents the latest setback in a lengthy sale
process that was derailed in October after a 1.65 million pound
($2.6 million) offer from Spain's Santander collapsed
when the process of carving out the business proved too onerous.
Indeed, a sale may prove so problematic that RBS is forced
back to the less-preferred option of a stock market flotation
for the chain, likely to take longer to organise and which would
be prone to the usual vagaries of stock market mood afflicting
any new share offering.
RBS has been ordered to sell the branches in return for
receiving a 45.5 billion pound bailout during the 2008 financial
crisis which left British taxpayers owning 81 percent of the
The latest bidding round attracted offers from Richard
Branson's Virgin Money and, jointly, U.S. private equity houses
JC Flowers and Apollo. But bids fell well short of Santander's
offer and RBS is exploring alternatives.
The bank is trying to tempt Britain's largest member-owned
financial institution Nationwide back into the process, sources
have said. Nationwide did not submit a proposal in December but
sources say it has continued to talk informally with RBS.
RBS declined to comment on the sale process, as did UBS,
which is advising the bank on the sale. Virgin Money, JC Flowers
and Nationwide also declined to comment.
One source close to the process told Reuters RBS was
adopting a "dual track" approach, examining options for both an
outright sale and stock-market listing of the business.
Yet the source said it could take up to six months for the
bank to make a decision. At that point, it is likely to ask
Britain's Treasury to request the European Union extends a
deadline for RBS to sell the branches by the end of 2013.
An extension of the deadline would give RBS more time to
prepare for a flotation, if it is unsuccessful in pulling off a
direct sale, which sources said is still its preferred option.
The business has been ring-fenced and run under separate
management so the process of spinning it off would be relatively
straightforward. Dubbed "Rainbow", it made an operating profit
of 186 million pounds in the first six months of the year.
Analysts said the lack of credible buyers means RBS is
likely to need more time to achieve a sale and will have to
accept a much reduced price.
"The simple truth is that there ... aren't many obvious
potential buyers for this particular asset, hence why, in
likelihood, RBS will have to crystalise a loss to achieve
disposal," said Investec analyst Ian Gordon.
Rival Lloyds Banking Group has also struggled to
sell around 630 branches it was ordered to sell following a
bailout which left it 40 percent state-owned. It has agreed
terms to sell the branches to the Co-operative Group
but has yet to complete the sale.