Richard Branson wants RBS bank branches at a knockdown price

Oct 15, 2012

But there could be competition from US entrepreneur Christopher Flowers in wake of Santander pull-out

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SIR RICHARD BRANSON has a potential rival for hundreds of Royal Bank of Scotland branches back on the market after the £1.65  billion sale to Santander collapsed on Friday. According to the Financial Times, US private equity entrepreneur Christopher Flowers is keen to expand the firm’s relatively small regional British lender One Savings Bank.

But Sir Richard’s Virgin Money operation, which acquired the previously nationalised Northern Rock, says it would consider making a fresh bid for the RBS business, which includes 316 branches, 1.8m retail customers and almost 250,000 small business accounts.

The Daily Mail says Branson has a £650 million budget for the bid - about half the ‘book value’ RBS places on the business and less than Virgin offered when it was beaten out by Santander in 2010.

Consumer groups have already expressed concern that taxpayers will be the losers if Virgin acquires the RBS assets at a steep discount. RBS is 83 per cent owned by the taxpayer after a £45 billion bailout. "I would have concerns about this because the UK taxpayer is already in for a substantial amount of money on RBS and we could come out of it with a big loss," says Eddie Wetherill of the Independent Banking Advisory Service.

But Wetherhill said he couldn't blame Branson for "trying it on". After all, Branson "is an entrepreneur with an eye for opportunities. But I don’t trust a system that allows entrepreneurs to feather their nests."

Wetherill asked if the government is even capable of getting a good deal for the taxpayer.

Reuters said RBS shares were expected to open lower this morning following Santander's decision to pull out. The collapse of the sale came at a crucial moment in the bank's recovery, says Reuters, and could delay the schedule of repayments on the bailout.

Another possible bidder for the assets is NBNK, a venture set by former Lloyd's of London insurance head Peter Levene and led by ex-Barclays executive Gary Hoffman. Co-op is considered an unlikely bidder; Metro Bank says it is focused on organic growth, while Tesco Bank has said it is not looking at buying branch networks.

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