RBS Keeps Options Open After Santander Fail
The chairman of Royal Bank of Scotland is confident the European Commission (EC) can be persuaded to rethink its demand that the bank sell off hundreds of its branches.
Shares in the part-nationalised lender fell 3% in early Monday trading after the planned sale of 316 branches, with their 1.8 million customers, to Santander UK collapsed late on Friday.
RBS had been told to offload them as a penalty for the bank's £45bn bailout by the Government but Sir Philip Hampton believes that could be set to change.
He told reporters in Japan that Brussels was now far more flexible on penalties for state aid than at the time the ruling was made.
The bank would be keen to hang on to the branches - currently operating as a standalone business - as they contributed £186m in operating profit in the first half of the year.
Officially, however, RBS has said it will "continue to work to fulfil its obligations to the EC".
In a statement to the City, its CEO Stephen Hester said: "RBS will commence a new process of disposal following discussion with the EC and will provide a further update on this in due course."
It may be that the bank applies to the EC for an extension to the 2013 deadline for a sale to be completed and should it pursue such a move analysts say RBS may have to drop its £1.65bn asking price.
Sir Richard Branson's Virgin Money has emerged as a possible alternative bidder while US private equity entrepreneur Christopher Flowers is also interested in a potential bid, with the firm reportedly keen to expand its small regional lender One Savings Bank.
Andy Golding, the chief executive of OneSavings said: "We have not been in contact with RBS at this stage, however like everyone with a position in UK banking, this is an interesting and unique situation that justifies some preliminary thought. That is as far as it goes for the time being."
Virgin is seen as the current frontrunner after losing out to Santander in the original bidding when it bought from the Government the remains of Northern Rock instead.