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Handful of bidders for RBS's Williams & Glyn's

Robert Peston | 18:36 UK time, Tuesday, 6 April 2010

Royal Bank of Scotland has received at least five indicative bids for its specially created Williams & Glyn's operation, which it is being forced to sell by the European Commission.

By this afternoon's deadline for first round bids, RBS had received preliminary offers from Santander, the giant Spanish bank, Sir Richard Branson's Virgin Money, another Spanish bank, BBVA, the Australian bank, National Australia Bank and a private equity outfit, JC Flowers.

The bank, advised by UBS, will now begin the process of whittling the bids down to a couple, with a view to naming a single preferred bidder by July or August.

The final selling price is expected to be over the book value of Williams & Glyn's net assets, which is between £1bn to £1.5bn.

But bankers say that how much of a premium RBS ultimately receives is difficult to judge.

One said that Williams & Glyn's is a difficult operation to sell because its business customers feel very loyal to RBS and may not want their accounts transferred to a new owner of the branches.

Santander was always expected to make the highest offer, for two reasons.

First, Williams & Glyn's specialises in small business banking, where Santander is under-represented in the UK.

Second, Santander already has very substantial UK operations and would probably find it easiest in a technical sense and least costly to separate Williams & Glyn's 318 branches and £20bn of loans from the rest of RBS.

Also Williams & Glyn's is just small enough, with a 2 per cent share of the retail banking market, for a takeover by Santander not to be blocked by the competition authorities: some analysts believe Santander could be prohibited from buying the pure retail operations of the cleaned-up Northern Rock and of Lloyds's Cheltenham & Gloucester, to be sold within the coming year or so.

Virgin Money, which is receiving financial backing from the deep-pocketed US investor, Wilbur Ross, would dearly love to buy Williams & Glyn's but would find it difficult to justify offering as much Santander.

Comments

  • Comment number 1.

    Roll up. Roll up.
    Licence to print money on offer.
    Roll up. Roll up.

    Oh and if that is not enough then as an added sweetener there will be a government(taxpayer) guarantee thrown in.
    And help with start up costs. And.

    Roll up. Roll up.

  • Comment number 2.

    Yes, but what due diligence steps have the potential buyers undertaken?

  • Comment number 3.

    Did any body read the blog about Kraft and Cadbury are we just repeating the same mistake, selling off good British businesses to the highest bidder and in return making short term profit for the shareholders but a long term loss for the economy.

  • Comment number 4.

    Well let's hope that Virgin isn't the highest bidder otherwise they will bring the same poor track record of customer service to banking as they have to their rail and media companies.

  • Comment number 5.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 6.

    What's wrong with putting the bank up for sale in the time honored way of issuing a prospectus laying out all the details? Who knows small investors may be interested to make some money instead of the rates avaiable, and the Gov get real cash not just paper. Regards Virgin isn't this a private company with questions raised about it's transparency/opacity accounting,also isn't it just a marketing brand with varying degrees of succes from Airlines to Coke drinks. If they acquire W&G who would be the benificial owners and how would they pay paper or cash?

  • Comment number 7.

    (Looking back at the previous story re Kraft)

    Perhaps, I could have Williams and Glyn's financed by a loan from RBS!!! That is how capitalism works, isn't it? I could then use some money created through synthetic financial instruments manufactured by the bank to pay off the loan and hey presto I could then sell off the bank yet again for a profit of a billion or so - good stuff this capitalism when the regulators conspire with you to ensure you make money! (All I would have to do is to avoid doing any actual business!)

    The once absolute certainty is that the loser will be the taxpayer...

    I'd really quite like a bank (and we had one a few years back when all one needed as a set of tails and a top hat for the monthly Bank of England meeting) particularly one that is guaranteed to be profitable!!!

  • Comment number 8.

    #3

    Yes.

  • Comment number 9.

    Surely the idea of creating a "NEW" Bank is exactly that!? Santander should be barred from the bidding process on the grounds that they hold a very large share of the UK market already. They are not a "small" bank by any means. If a new bank is not created, then the whole process is a complete and utter waste of time. If an existing bank does get these branches and more importantly customers... lets hope the customers return to RBS to help deliver more profits to the taxpayer through a much leaner outfit!

  • Comment number 10.

    This is excellent news. Not only are we going to have more competition in the banking market, but RBS (i.e. us) are going to get a decent price for the assets because there are competitive bids.

    It doesn't really matter whether the shareholders of this new business are in the UK, Spain, the US or (as with any public company) some combination of different countries.

    The benefits to us all as consumers of banking services will be far greater than whatever profits the owners make over and above their purchase price.

    More competition is the main solution for the problems that still remain in the banking sector: http://www.knowingandmaking.com/2010/03/step-towards-competition.html

  • Comment number 11.

    this is all being done for the wrong reasons, the shadowy figures must be laughing all the way to the bank, so the European Commission if forcing this through ? what about PNB Paribas and Deutsche Bank then ?
    yet again the spoils are being dished out and the crap laid at the publics door

    so electioneering has began
    I dont want the men in suits saying that they feel my pain, I dont want the men in suits saying they will create jobs or protect front line services etc etc etc, this is all talk, I want to be told that those responsible for the illegal wars undertaken under false pretences those who gambled in the financial industry, the regulators who turned a blind eye, the ministers who looked the other way, the lobbyists the shadowy figures, the Leaders of nations who continue to tell untruths to be exposed and brought to justice, we need real change not just a change of name on the doorplate

  • Comment number 12.

    I get it now. I borrow money from RBS at X% to buy W&G. Then someone borrows money from W&G at X+1%, giving a profit. Then RBS invests the money they got from me in a profitable W&G for a X+2% return. I get control of a Bank, someone gets a loan and and RBS makes a profit! This capitalism is really easy! ..................isn't it.

    We need to be careful that we do not end up with an even worse economy of mirrors. Actually we have a society of mirrors - false illusions, false politics.

    This General Election is going to be the most destructive we have ever had. All we have is parties saying, "Trust us."

    In response to the question, "Trust you to do what?"

    The pathetic reply, "We'll tell you later." This position is defended because they say they don't know how bad/good things are.

    I know when I have a health problem I would much rather be told by my doctor, "First we will try this. Hopefully it will work, but if it doesn't we'll have to ...." There is an open and honest plan. Would I stay with a doctor who said, "You'll just have to trust me," without giving any real details?

    Do these pathetic excuses of humanity think that the British public cannot face up to what the situation really is? Of course we will get 'honesty' from an incoming Conservative government - make things as black as possible so that when things don't go right, they can invoke the great demon called Brown for as long as possible. But that will only be part of the playing with mirrors which is the main feature of our poltics and I am sure will be a feature of the sale of W&G.

  • Comment number 13.

    Sorry Robert, not realy on this topic, but had to draw your attention to this

    THE UK DEBT MANAGEMENT OFFICE HAS MYSTERIOUSLY CHNAGED THE DATES OF ITS GILT AUCTI0N TO "AVOID THE ELECTION".... IE THEY ARE WORRIED ABOUT LACK OF BUYERS (NOW BofE NO LONGER BUYING)... A TOTAL SHAM!!! THE UK POPULATION IS TOTALLY UNAWARE OF THE DIRE FISCAL SITUATION THE NEXT GOVERNMENT WILL INHERIT

    http://www.dmo.gov.uk/rpt_parameters.aspx?rptCode=D5D&page=Issuance_Calendar

  • Comment number 14.

    #1 Oh and if that is not enough then as an added sweetener there will be a government(taxpayer) guarantee thrown in.
    And help with start up costs. And. [sell for a billion or so more than i buy for]

    Why does it seem that Richard Branson is always first in the queue for effectively tax payer guaranteed profit. He dosn't seem to be able to run a company without it.

    Please do not get fooled (IMO) in thinking that their is anything patriotic about the Virgin proposal. If Branson should retire to his carabean island this will be one of the biggest avoidance schemes of paying uk tax of all time. In terms of saving UK jobs, virgin it technical support is certainly outsourced to India (albeit a very efficient part of the service)


  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    5. At 8:53pm on 06 Apr 2010, Lil Keke wrote:
    In Da Industy Vs In Da Streets
    ________________________________________________
    (1) RBS Banking Takeover
    RBS bought Mercury Asset Managements system
    RBS put their own investment clients on it
    RBS sold the investment bank to Bank of New York
    RBS bought Nat West

    Merril Lynch bought MAM - so, very droll style but duff content

  • Comment number 17.

    The only reason Branson is interested is because he must think it will make more money for him. The new bank will have 2% market share so that will really increase the competetion then.

    Whoever wants it should buy it at what they think its worth & without taxpayer support then let them get on with making a profit or not

  • Comment number 18.

    Surely the best candidate is NAB - National Australia Bank, as it already has Clydesdale in Scotland (which lets face it needs a bigger network from the RBS/LLOY disposals), Yorkshire in England (again needs branches & clients) ...also as NAB isn't exactly small, it can afford to back the transactions for the debt of small business clients. Santander is substantially bigger in the uk with the old Abbey, A&L, B&B thus restricting competition already.

    Surely if a new decent-sized institution is created then this will be good for competition. That said NAB really should pick one brand and build upon it like HSBC, Santander, Barclays etc.

  • Comment number 19.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 20.

    If I understand this correctly the European Commission is forcing RBS to sell it's English branches to benefit consumers/customers?
    As a customer at an English branch of RBS I fail to see the benefit of being railroaded to Virgin or Santander - only a pile of hassle.
    If I wanted to change banks I would move my account.
    It now seems I'll have to move my account to a bank of my choice which may well be a Scottish branch of RBS.

  • Comment number 21.

    Like j_neish, I am also a customer of an English branch of RBS. I have been happy with their service, particularly the internet banking service.

    Now I find that my custom is to be sold to another management in a long drawn out process. I am not happy and do not appreciate the inference that I shall just sit there and let it happen. Frankly, I do not wish to bank with an Australian bank with a head office thousands of miles away. The temptation for them must be to cut costs and boost short term profits at the expense of long term customer service. The head office is likely to be too far physically removed for customer service issues to have a direct input into head office decisions. From what I have been able to see from the internet, cost cutting rationalisation and centralisation measures have led to a decline in customer service at Yorkshire and Clydesdale banks in the last couple of years.

    Similarly, there is no way I would wish to bank with a private equity owned institution. As I understand it, private equity is all about cost cutting and piling up debt on the target's balance sheet (although I don't suppose the Bank of England would allow the latter strategy in the case of a bank!) with the objective of boosting short term profits in anticipation of a sale in, say, five years time. Great for shareholders; not so good for customers.

    The other options also do not seem particularly attractive from the point of view of a customer.

    So I shall probably move my account to NatWest, where the features of the accounts and of the internet banking service are now identical to RBS. It will just be the staff that change, unfortunately. It is a pity and I don't really want to do it, but why should I wait to be moved against my will as a sort of pawn?

    The arrogance of the assumption by the EU that customers will just passively wait to be 'sold on' as part of a customer list is breathtaking.

    I suspect that many other customers of RBS English branches will pre-empt the move to new ownership if they are not happy with the nature of that new ownership once it is revealed.

  • Comment number 22.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 23.

    Hmm .. buying a 'private' bank like W&G is, as usual, about buying customer data = new sales of financial products.

    Get real everyone - your data and financial history is what all financial institutions pay for - to use/and or sell on with your ex-directory number too?

    Come on consumers - start thinking like bankers, and all their 'affiliates' and that will be a start to protect yourself?

    Imagine you just bought a bank/company or any organisation that held personal address/'phone/bank/credit card/insurance data etc., etc., - what would you do ......?

    Yes it should scare you - if not - you are either an unregulated FI or part of 'boiler room' never based in UK?

  • Comment number 24.

    Let's hope your Australian bank will not be a part of Westpac who moved in to UK during high interest rates under Conservatives and moved out of UK under Labour low interest rates.

    This comment is not political - it's purely knowledge of being screwed as a family back in the 1980s?

    Just be very wary of the 'bank' that buys your bank? The transition will obliterate all your existing rights and contract?

  • Comment number 25.

    If your new bank is Australian - it will not be based in Australia, but to near Eastern call centres, not obliged by Data Protection laws, nor will their employees be fidelity-bonded?

    If your bank or credit card company forces you telephone bank abroad - you may assume that your data and personal information is not protected?

    If you use First Direct for telephone banking/credit card/ and all banking issues, then you will speak to someone employed and working and paying taxes and NI in the UK. Plus they will have to comply with UK Data Protection Laws also!

  • Comment number 26.

    Any propsective puchaser must be hopeful if they think they are buying a customer base- although inertia may mean a lot will stay.
    I opened my account with Willam & Glyns bank about 20 years ago- they offered great personal service etc. The takeover by RBS did not make much difference to service standards etc. it was a bit of a pioneer with on-line banking, and system is still very good. However once RBS had taken over Natwest it became much like any other bank- probably as the result of the former CEO hacking etc.... I have kept my account with RBS (thankful that I did not buy any shares- nearly!) to see what happens afer the nationalisation; although had a bit of a panic for a while!! Have no intention of keeping my account with them if it is taken over by Santander- had an A&L account and service was rubbish after takeover. As for the prospects of Virgin etc.. no thanks!I wonder if they will offer shares to existing account holders in an attempt to make them stay? I will probably move to Natwest- very familiar set-up etc. or more likely Nationwide- no shareholders & overseas call centres.

  • Comment number 27.

    Royal Bank of Scotland Group*

    *Top Ranking In The Bigger Banking

  • Comment number 28.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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