Spanish banking group Santander is set to acquire 318 branches of Royal Bank of Scotland (RBS), as it is the only bidder remaining in the sale process that ends on June 14, after National Australia Bank pulled out of the auction and interest by BBVA petered out.
The Spanish bank, which had acquired Abbey National, Alliance & Leicester and the savings arm of Bradford & Bingley recently, is set to make a final offer of between GBP1.7bn and GBP1.8bn, which is significantly below the indicative offer of about GBP2bn it made in April this year.
After a close examination of the quality of RBS’ portfolio, Santander has scaled back to reflect the losses it may have to suffer on the loans portfolio being sold alongside the branches.
The deal is expected to increase Santander’s share in Britain’s small and medium-sized company market from 3% at present to about 9%.
RBS, which is 84% controlled by British government, has been mandated by European Union to sell the branches by 2013. RBS sold its European commodities business to JP Morgan for $1.7bn.