Banco Santander and Virgin Money are said to be ahead in race to acquire Royal Bank of Scotland (RBS) Williams & Glyn's branch network, after the European Commission asked RBS to divest core assets to repay the taxpayer funds it received at the height of the financial crisis.
Besides the two banks, BBVA, National Australia Bank (NAB) and US-based investment firm JC Flowers are also vying for the network.
Alongside 1.8m retail customers, which is 2% of the UK retail market, Williams & Glyn’s network has a robust business banking offering with corporate and business banking centres.
Reportedly, the network has 5% of the total small and medium-sized enterprise market and 5% of the medium-sized company market. The buyer will get around 5% each of UK’s small business and mid-sized corporate markets, areas Santander has targeted after building up in retail.
Banco Santander, a strong contender to bag the deal as it has existing operations across UK, is said to have offered nearly GBP2bn for the branch network.
Virgin Money, which has been backed by US billionaire investor Wilbur Ross, is expected to give tough competition to the spanish bank. Reportedly, Mr Ross is expected to make a further investment of upto GBP500m to help Virgin Money acquire 318 RBS branches.
Sir Richard Branson, group head of Virgin Group, said: “Our ambition is to make everyone better off through good value and transparent products backed by a great customer experience,” reported Reuters.
Melbourne-based NAB is also weighing its options to participate in the consolidation of the UK banking sector. Cameron Clyne, CEO of NAB, said: “We are assessing all the options at this point in time,” reported Businessweek.
However, Ian Gordon, analyst at stock brokers Exane BNP Paribas, expressed scepticism about Virgin’s interest in the RBS branches. “The reason I see Santander as the most logical acquirer is that the RBS branches and its small business banking [clients] is what Santander wants and needs.”