Published On: Tue, Oct 25th, 2016

Clydesdale Bank makes offer for 300 RBS branches

Royal Bank of Scotland

Royal Bank of Scotland has been thrown a potential lifeline after Clydesdale Bank made an offer for 300 branches which RBS must offload under the terms of its £45bn bailout.

The sale of the branches, which were due to be rebranded Williams & Glyn, has been protracted and RBS has warned the City that it risks failing to meet the end of 2017 deadline imposed by the EU for extricating the network.

Clydesdale’s bid will be a relief for RBS, which is trying to demonstrate that potential exit routes are still being pursued for the branches, which largely comprise branches of RBS in England and Wales and NatWest in Scotland.

Ross McEwan, the RBS chief executive, warned last month that the bank would enter uncharted territory if he failed to find a solution to the branch sale, which has cost the Edinburgh-based bank £1.5bn to date.

He will face questions about the sales process on Friday when RBS is scheduled to report its third-quarter results, which are expected to add the £52bn of losses incurred by the bank since its 2008 taxpayer rescue.

Clydesdale, formally known as Clydesdale and Yorkshire Banking Group, floated on the stock market this year after an often tricky relationship with its former owner, National Australia Bank.

It has long been touted as a likely bidder for the Williams & Glyn network, which has about 5,000 staff and market shares of current and small business accounts of 2% and 5% respectively.

Clydesdale declined to comment on the speculation about its offer, which has emerged weeks after Santander, regarded as another likely suitor, withdrew its interest.

It is not clear if the UK division of the Spanish bank, which has been formed through the amalgamation of Abbey National, Alliance & Leicester and parts of Bradford & Bingley, is ready to enter the process.

Santander was initially the agreed bidder for the branches but abandoned the talks in 2012. A deal was announced in 2013 with a consortium backed by private equity investors and the Church of England to try to complete the separation through a stock market flotation under the Williams & Glyn name.

Any attempt at a flotation was abandoned in August when it concluded that the low interest rate environment would make it difficult for the operation to be profitable as a standalone entity. The consortium has received at least £180m from RBS for backing the aborted float.

RBS would not comment when asked whether Clydesdale had entered the bidding process. In a previous statement, it said: “We continue to explore options in meeting our obligations to the European commission. We have been clear that there is interest in the business and this remains the case.”

The branches are thought to be valued at about £1.3bn but are not expected to fetch as a high a price when – or if – the deal is done.

The stumbling sales process for Williams & Glyn was among the reasons cited by Philip Hammond this month when he said the time had not yet arrived to sell the taxpayers’ 73% stake in RBS.

The chancellor also pointed to the uncertainty over a long-running investigation by the US Department of Justice into the mis-selling of mortgage bonds, which could cost RBS £9bn.

RBS shares closed at 192p on Tuesday, well below the 502p average price at which taxpayers bought the stake and less than the 330p level at which Hammond’s predecessor, George Osborne, sold a 5% stake in August 2015.

 

 

 

[Source:- Gurdian]