Royal Bank of Scotland Group Plc is drawing interest for the 316 branches regulators are forcing it to sell from a new suitor, AnaCap Financial Partners LLP, a private-equity backer of Aldermore Bank Plc, said four people with knowledge of the talks.
RBS, Britain’s biggest government-owned lender, sent sales documents to potential buyers last week, said the people, who asked not to be identified because talks are private. Other possible bidders include Nationwide Building Society, Richard Branson’s Virgin Money Holdings (U.K.) Ltd. and U.S. investor JC Flowers & Co., said two of the people. UBS AG is managing the sale, which has been codenamed “Rainbow.”
RBS has to sell the outlets by 2014 to comply with a European Union state-aid ruling after receiving 45.5 billion pounds ($73 billion) in the biggest banking bailout in the world in 2008 and 2009. Banco Santander SA (SAN), Spain’s biggest bank, abandoned its 1.7 billion-pound purchase of the branches last month, citing completion delays. The outlets are now likely to fetch less than what Santander offered, one of the people said.
“AnaCap specializes in financial assets so this would be their sweet spot,” said Cormac Leech, a banking analyst at Liberum Capital in London. “The branches are incredibly profitable so to some extent RBS is selling its crown jewels to get the state aid past the EU Commission.”
The unit, which posted a 186 million-pound operating profit in the first half, had 21.7 billion pounds in customer deposits and serves both small businesses and consumers.
Officials at RBS, AnaCap, Aldermore, Virgin Money and Nationwide declined to comment. A spokesman for JC Flowers couldn’t be immediately reached for comment.
AnaCap was started in 2005 and oversees about 1.7 billion euros ($2.2 billion). The firm agreed in June 2011 to purchase Banco Popolare’s Czech banking unit for 48 million euros. In April 2011, it agreed to buy Cabot Financial, a consumer debt collector, from Citigroup Inc. The firm is also the controlling shareholder of Aldermore, a Peterborough, England-based lender started by Phillip Monks and AnaCap in 2009. Aldermore, which has no main-street branches, has about 2.1 billion pounds of assets, according to its website.
In October, the London-based buyout firm formed a joint venture with Blackstone Group LP (BX:US), the world’s biggest private-equity firm, to seek investments in banking and insurance.
RBS may approach the European Commission and seek an extension to the branch-sale deadline as the U.K. economy, which is struggling to recover from a double-dip recession, makes it less attractive to sell financial assets, one of the people said. Edinburgh-based RBS may also consider an initial public offering of the branches, one of the people said.
“RBS may be able to hit the EU deadline,” Leech said. “But it may also seek an extension because the longer they have to sell, the more valuable these branches could become as the U.K. economic outlook improves.”
Branson said on Oct. 26 he is “not particularly encouraging” Virgin Money to buy the RBS branches. Virgin Money agreed to buy part of Northern Rock Plc last year for 747 million pounds and moved its headquarters to Newcastle, England, the mortgage lender’s base. JC Flowers, the private-equity firm started by former Goldman Sachs Group Inc. banker J. Christopher Flowers, was among parties that also submitted bids for the bank, which the U.K. government took over in February 2008.
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