VIRGIN Money is stepping up its plan to bid for 320 Royal Bank of Scotland branches with a book value of around £2bn.
The firm confirmed it has hired Greenhill to help prepare a bid before the 6 April deadline for submissions of interest. It hopes to become a major player in the internet banking sector.
The news will be welcomed by the government, which is desperate to inject more competition into the banking sector.
It had faced an embarrassing situation in which the Spanish giant Santander appeared to be the only credible option for buying the retail banking outlets.
Now National Australia Bank, which owns Clydesdale Bank and another Spanish bank BBVA look set to compete for the branches.
One banking analyst told City A.M. Virgin is still the outsider but questioned the value of the branches to Santander. He said: “The government will be breathing a sigh of relief over this as they have been pushing the increased competition agenda. But it’s going to be tough for Virgin. At the end of the day it will come down to who can get the most value out of it – and who makes the biggest bid. UKFI will be seeking to maximise the value for the tax payer. I question how much more coverage Santander needs. They would need significant holes in their portfolio for this to represent great value for them.”
Greenhill is working alongside Quayle Munro to calculate the value of the deal for Virgin and put together a bid. Santander is being advised by Credit Suisse and Lazard. National Australia Bank is being advised by Goldman Sachs and Morgan Stanley.