Corsair in lead to buy business bank from RBS

 
RBS sign

The Royal Bank of Scotland is very close to deciding to sell to Corsair the small business bank it has been forced by the European Commission to create and hive off.

The bank's board is expected to decide today to give Corsair the exclusive right to negotiate on finalising the deal - although an announcement may not be made till early next week.

It would be a fairly significant milestone in the process, initiated by the European Commission after RBS and Lloyds were rescued by taxpayers in 2008, of increasing competition in the UK banking market.

RBS is being forced to sell 315 branches, serving around 250,000 small business customers, 1200 medium size businesses and 1.8 million retail customers.

What RBS is selling is a smaller business in the round than what Lloyds has been forced to de-merge (631 branches recently renamed as TSB, to be floated on the stock market next year) but it is bigger in the economically important small-business market.

In the bidding process, the main rival to Corsair - whose vice chairman is Lord Davies, a trade minister in the last Labour government and ex-chief executive of Standard Chartered - was another private-equity group, led by Blackstone of the US.

RBS's directors take the view that both private equity bids offer better value to RBS's owners - notably taxpayers with an 81% stake in the bank - than the bid from a large consortium of City investment institutions, chaired by the former Tesco finance director, Andy Higginson.

"The Higginson offer was way below Corsair and Blackstone on value" says a source.

I reported earlier this week that RBS had rejected the Higginson offer.

Apparently in price terms, there is not a great deal to separate Corsair and Blackstone - which is not a great surprise, given that they have similar business models and are working with the same data.

However Corsair is preferred because of its "vision" for the bank, said a source, and its "controls".

RBS will retain a stake in the hived-off bank, as and when it is sold to Corsair, so that it will benefit from any increase in its value, as and when it is floated on the London Stock Exchange.

It had planned to sell the whole thing to Santander, but that deal fell through a year ago.

RBS will need to get an extension from the European Commission of the deadline to sell the whole of this small-business bank by the end of the year (or rather, the Treasury will have to negotiate this extension on behalf of RBS).

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 64.

    I agree with many of the posters here. The implicit subsidy to the banks from we the taxpayers is 130Bn per year and it has been called on as a result of the bailouts. Banks should live and die by the sword. This can only happen when we are not dependant on them for money (as debt).
    Support www.positivemoney.org.uk.

  • rate this
    0

    Comment number 63.

    Robert
    Am confused.
    There must be some politician ready,willing and able to curb the greed of our Bankers?
    Can you name that man?
    If not..
    Why not?

  • rate this
    0

    Comment number 62.

    Robert, I know you've had a tough time of late but you are supposed to be the business editor rather than the business-as-long-as-it-is-banking editor. This is a minor story of little interest. How about some proper coverage of manufacturing, retailing, pharma, technology? Or about training, recruitment, international business? Instead it is endless, boring stories of banking regulation and M&A.

  • rate this
    +4

    Comment number 61.

    For as long as there exists ANY bank that is 'too big to fail' our state has been stolen from our people.

    The gutless wimps who said this about the banks in 2008 knew that this was unacceptable - BUT THEY HAVE DONE ABSOLUTELY NOTHING ABOUT IT!

    By not doing anything about this situation the state has acknowledged that it is subservient to the banks - hence they have acquiesced in a quiet coup!

  • rate this
    +2

    Comment number 60.

    The bankers have taken over the state - they have had a coup. But the law does not apply to bankers - they have got away with it ... so far!

    They really have subverted the whole state. It is an absolute disgrace and affront to our democracy that the elected politicians,our judiciary - and indeed our armed forces and our police have let they get away with it.

  • rate this
    +2

    Comment number 59.

    The tragedy is that the idiots(see 58) think they can go on creating money exponentially - forever! They know this is not true. But they are so deep in the hole that can't understand that the only way out is to reverse policies.

    The fools would agree that we must return to ordinary monetary times and jettison the extraordinary money we have now. They are just far too stupid to actually do it!

  • rate this
    +1

    Comment number 58.

    57.DevilsAdvocate

    "If you voted LibLab or Con are you not part of it?"

    Well not really, as the system operates outside any form of elected control.

    The idiots are mainly the permanent civil servants / BoE staff who ALWAYS & only take the part of the bankers - Democracy is a myth - it is a Bankocracy. ONLY policies that help bankers become get enacted.

    And, of course, Tories in all parties!

  • rate this
    +1

    Comment number 57.

    48.
    John_from_Hendon
    20th September 2013 - 22:16

    47. paddy2407 "Bank clerks aren't to blame!"

    Well, perhaps not, but like workers at a cigarette manufacturer they are part of the system that is to blame.
    =
    If you voted LibLab or Con are you not part of it too?

  • rate this
    0

    Comment number 56.

    Note the word Privateer (for State sanctioned robbery and murder).
    So this is why they wish to privateerise the Public Sector ?

    Plunder all round me hearties !
    Not for thee, thou art but a peasant and didst not go to Oxford or Harvard !
    More Rum and foreclosure punch !

  • rate this
    0

    Comment number 55.

    Ah well, at least its not the Sick and needy being sacrificed for the Slick and Greedy !
    Oh wait it is !
    Why not spin off Nat West ? Wouldn't that be a good idea ?
    Oh wait good ideas not wanted unless they come from arch pirates goldy Sackseveryone.

  • rate this
    0

    Comment number 54.

    52.pietr8

    Real competition would be to transfer the branches to a small bank set up for the purpose

    =====

    That s what will happen in this case.
    This and the creation of TSB is the start of the breaking up of the banks as advocated by many of you, but it seems that you do not want to acknowledge it!

  • rate this
    0

    Comment number 53.

    52.pietr8

    Real competition would be to transfer the branches to a small bank set up for the purpose

    =====

    surely that is what wll happen

  • rate this
    +2

    Comment number 52.

    The object of the sale is to increase competition. Don't make me laugh! Just pirates transferring business between each other.

    Real competition would be to transfer the branches to a small bank set up for the purpose. It would pay some interest to depositors and charge reasonable rates to borrowers, oh and no £1mln bonuses or pay
    By comparison, banks make pay-day loan companies look virtuous.

  • rate this
    0

    Comment number 51.

    @ 6 & 9. For years the MPC's policy has been set in support of the banks at great cost to savers, pensioners & all those whose income growth has failed to keep pace with inflation. Sure - it's a "bankocracy".

    The longer it goes on the more people will be tempted to vote for extreme political solutions - or worse. The 1% are desperately trying to fix the mess before time runs out. Will they?

  • rate this
    0

    Comment number 50.

    #48 John; so are the minions culpable by staying quiet at a risk to their livelihoods? It was a culture shared by all and fuelled by political ignorance / stupidity. No-one can be proud of the outcomes of the past but where does the blame lie? With the soldier or the general? What of the comms industry / energy industry today? What is your message to those who work in these pariahs of society?

  • rate this
    -2

    Comment number 49.

    John_from_Hendon @48
    "Each little apparatchik (has)
    joint & several culpability"

    All working within 'our' framework of law,
    The 'culpability' then shared by all, by 'us'

    The problem that 'we' cannot escape, is conflict of interest, in lack of equal partnership, that lack simply from ignorance, uneducated or misdirected

  • rate this
    +5

    Comment number 48.

    47. paddy2407 "Bank clerks aren't to blame!"

    Well, perhaps not, but like workers at a cigarette manufacturer they are part of the system that is to blame.

    The banks must be broken up so that they can fail without crashing the whole system.

    Each little apparatchik is part of the mechanism that is the problem so they cannot escape joint and several culpability.

  • rate this
    -3

    Comment number 47.

    Guys, you simply do not draw any distinction between investment bankers and the hundreds of thousands of staff working in banks across local communities. These are not responsible for the mess; it is the former and the corporate psychopaths that led these organisations that caused the crash. Read about UK PLC successes today and ask yourselves, who is funding this now?? Real bankers are out there.

  • rate this
    +3

    Comment number 46.

    No44 Paddy,
    I for one, do read the 'financial press'
    I read today that one of the biggest UK banks has been robbing another 300,000 of its customers.
    Did you manage to read the story?

  • rate this
    0

    Comment number 45.

    #44. paddy2407

    Ah. I see.

    You would have us all believe that these bankers, paragons of virtue, are doing God's work I suppose.

    Just so we know.

 

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