RBS looks to IPO 316 branches as rival bidders offer too little

Tim Wallace
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RBS is set to float 316 branches as an independent bank after failing to get any attractive bids from smaller banks or private equity buyers, it emerged yesterday.

The bank is being forced to sell the branches, which come with 1.8m customers and 250,000 small business accounts, by the European Commission as part of its state bailout package.

But its initial plan to sell them for £1.5bn to Santander fell through late last year, leaving the institution scrabbling to find a buyer before the EC’s deadline of the end of 2013.

In recent months it has been running a dual track process, preparing for an initial public offering (IPO) and for a sale. It now looks likely to press ahead with the former after a lack of good offers.

“The IPO is being considered as the best option for staff, shareholders and customers,” said a source with knowledge of the situation. “But if a trade buyer came up with a good enough offer then the bank would take that.”

Groups including Nationwide building society, Virgin Money and JC Flowers were all believed to be interested, but have dropped out or failed to offer enough. Analysts believe the sale may raise as little as £500m. RBS declined to comment.

Meanwhile George Osborne is pushing the bank to pay any Libor fine out of its bonus pot. The move represents an unprecedented intervention into the affairs of the bank, which is usually run at arms’ length rather than ministerial order.

UKFI, which manages the government’s stake in RBS, declined to comment.