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.

 

Comments 5 of 64

 

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