RBS branches bidder to list on AIM stock market

RBS Headquarters
Image caption RBS is required to sell 315 branches by the end of this year

One of the bidders for more than 300 branches put up for sale by Royal Bank of Scotland will list on the stock exchange next week.

The BBC understands that a group headed by former Tesco finance director Andrew Higginson has created a vehicle to be listed on London's AIM market.

It's understood that the listed company will be called W&G Investments, in anticipation of the branches being rebranded Williams & Glyn.

The vehicle is backed by £15m.

The funding comes from shareholders and 25 City investment institutions, including Schroders and Threadneedle.

The £15m of initial funding will be used to carry out a due diligence process if RBS accepts the group's bid.

The group has offered £1.1bn up front, rising to £1.5bn once the branches are formally separated from RBS early in 2015. The formal bid document will be submitted to RBS next week.

Three bids

The sale of the 315 branches by the end of this year is required by the European Commission under state aid rules when RBS was bailed out by the government.

A deal was done with Spanish bank Santander to buy the branches but this fell through last October.

Up for sale are Natwest branches in Scotland and RBS outlets in England and Wales. They cover 5% of total small business lending. It's expected that whichever bid is chosen, the Williams & Glyn name will be adopted. Once well-known on the High Street, that brand is owned by RBS.

Two other bids are being considered by RBS.

The former boss of internet bank First Direct, Alan Hughes, is heading a consortium including the private equity groups Blackstone and Anacap.

The Church of England is backing a bid team led by the US private equity group Corsair - the Church has called for a return to "traditional banking" if the offer is accepted.

These two consortia, unlike the Higginson-led group which wants an outright sale, would remain as partners of RBS until an eventual stock flotation.

RBS has not set a formal deadline but is hoping to conclude the assessment of the rival bids over the next month. It is widely anticipated that RBS will ask for the European Commission imposed deadline to be extended into next year to allow a successful bidder to carry out due diligence before legally binding documents are signed.

The RBS branches sale process continues as Lloyds undertakes a similar exercise. It is required by the Commission to shed 631 outlets.

After the collapse of a deal with The Co-op, Lloyds now plans to sell the branches through a shares float in 2014. They are being rebranded as TSB, and the newly named website has gone live on Friday.

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