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RBS branch decision put back as bidders get more time - sources
August 8, 2013 / 5:01 PM / 4 years ago

RBS branch decision put back as bidders get more time - sources

* Three groups remain in bidding for branch sale

* Private equity groups would be anchor investors

By Matt Scuffham

LONDON, Aug 8 (Reuters) - State-backed Royal Bank of Scotland is unlikely to decide how it plans to sell more than 300 UK branches until the end of next month after extending a deadline for prospective bidders, industry sources said.

There are three potential bidders, who have this week been finalising leadership and how to structure what is proving to be a complex deal, sources said.

RBS had set a “soft” deadline of the start of this week for bids to be made, but that was now likely to stretch into next week, industry sources said. The network could be valued at about 1.5 billion pounds ($2.3 billion).

The bank was likely to take several weeks to assess them as they will be structured differently and the bank needs certainty the successful bidder can deliver, making a decision before September unlikely, one person familiar with the matter said.

RBS must sell the 315 branches as a condition of receiving a taxpayer bailout in 2008, which left it 81 percent owned by the UK government. It is preparing the branches for a stock market flotation but may first sell a big stake to an “anchor” investor, who would stay on as an investor after the share sale.

Part-nationalised Lloyds Banking Group plans to list a network of 630 branches on the stock market by June 2014.

“We have had interest from investors in potentially joining with us in this journey and coming on as a partner, either as a pre-IPO investor or potentially in terms of a forward sale,” Bruce van Saun, RBS finance director, said last week.

Van Saun said the complexity of separating the branches meant the share sale was unlikely to happen until early 2015.

Three groups are expected to submit bids, sources said, but the complexity of the due diligence had delayed some processes.

The groups are a vehicle called W&G Investments that is led by former Tesco finance director Andy Higginson; a consortium including private equity firms Corsair Capital and Centerbridge; and a group led by Anacap Financial and Blackstone.

RBS suffered a bitter blow when a planned 1.65 billion pound sale to Santander collapsed in October. It is expected to ask the European Union to extend a December 2013 deadline for the sale when it decides on its preferred option.

The Corsair and Anacap-led approaches would involve them becoming anchor investors ahead of an IPO, whereas W&G would look to take a majority stake or buy the business out, the sources said. The three groups declined to comment or could not immediately be reached.

The Corsair/Centerbridge group is also backed by the Church of England’s investment fund, Standard life and a Rothschild investment fund and could pay 600-800 million pounds to take a minority stake, a person familiar with the matter said. It this week appointed former United Utilities boss Philip Green to lead the bid.

Higginson’s group last week launched W&G as a vehicle to evaluate and possibly pursue an acquisition of the RBS branches. It plans to list on the junior London stock market AIM on Aug. 14 and have enough money to cover due diligence costs.

The vehicle was named W&G to denote the expected name of the RBS branches being sold - Williams & Glyn.

The Anacap consortium will be led by Alan Hughes, a former chief executive of internet bank First Direct, the Financial Times reported last week.

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