* May seek cornerstone investors to anchor IPO -sources
* RBS preparing for flotation of business in next 2
* Corsair, Anacap, Higginson-led bids in contention-sources
* Too early to say which bid will succeed - source
By Matt Scuffham
LONDON, June 28 Royal Bank of Scotland
will make a decision on how to offload hundreds of branches it
has been ordered to sell by European regulators in the next
month, industry sources told Reuters on Friday.
RBS is preparing the business, code named Rainbow, for a
stock market flotation but is open to the idea of first selling
substantial stakes to strategic investors prior to an initial
public offering. The investor would then stay on as a dominant
force in the floated company after the IPO.
The bank must sell 315 branches as a condition of receiving
a 45.5 billion pound ($69.2 billion) government rescue in 2008
which left it 82 percent state-owned.
Industry sources said RBS is considering proposals from 3
sets of investors who could serve as the strategic partner.
One consortium is led by private equity firms Centerbridge
and Corsair and has backing from the Church of England's
investment fund, while another comprises several of Britain's
biggest investment firms and is led by former Tesco finance
director, Andy Higginson.
A third proposal has been submitted by British private
equity firm Anacap Financial Partners, in conjunction with U.S.
private equity group, Blackstone. RBS could also pursue a
stock market flotation of the branches on its own without having
additional investors on board, the sources said.
RBS is not yet favouring a particular proposal.
"All bids have their merits and it is too early to say which
bidder is most likely to succeed," said one source close to the
RBS is aiming to tell potential investors what its plans are
in the next month, the sources said, although that timetable is
not set in stone.
An IPO could happen any time in the next two years, the
sources said, but the bank would like to go earlier to avoid
competing against a glut of impending bank share sales.
The government is planning to start selling its shares in
Lloyds Banking Group soon while Lloyds is looking to spin off
630 branches via a stock market flotation.
The deal adds to an increasingly busy block of UK bank
assets seeking investment or new capital over the next year,
raising questions of whether the market will be swallow
Spain's Santander and Virgin Money, the financial
group that is part of Richard Branson's empire, are both
planning to float their UK businesses.
The sale of the RBS branches was halted in October when
Santander pulled out of a deal to buy the whole
portfolio for 1.65 billion pounds. RBS has said a sale this year
is now unlikely, meaning it will have to ask European regulators
to extend a December 2013 deadline.