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02 December 2023

Early April deadline for RBS asset sales

Royal Bank of Scotland has offices in Qatar and the UAE. (Reuters)

By Reuters

Part-nationalised Royal Bank of Scotland has set an early April deadline for potential buyers of its payment processing arm and more than 300 bank branches, sources familiar with the matter said.

RBS, 84 per cent state-owned after it was bailed out by the UK taxpayer at the height of the credit crisis, was ordered last year by EU anti-trust regulators to sell these and a string of other assets to compensate for billions received in state aid.

Details on both the bank branches and Global Merchant Services were received by suitors early this week, the sources said, following "teaser" documents sent earlier in the year.

More than 40 bidders have shown an interest in the payment processing unit, best known as WorldPay, and were considering offers, industry sources said. The release of the information memorandum provides the first detailed financial disclosure on the asset. The deadline for indicative offers had been set at April 7, sources said, just days after the long Easter weekend.

That deal, estimated to be worth between £1.5 billion (Dh8.27bn) and £3bn, has seen private equity firms, including BC Partners, Apax Partners and Advent International, as potential suitors, according to industry sources. RBS last week said that there was "quite a queue" of interested suitors looking at WorldPay, but "a queue not quite as long" for the bank branches – the RBS-branded network in England and Wales and NatWest in Scotland.

Two sources told Reuters the deadline for indicative bids for the branches – a far more complex sale – had been set for just before the Easter break in the first days of April.

One of the sources said RBS would decide after that deadline, and based on indicative valuations, whether to proceed with the bank sale or "pause" it until the market and broader UK economy improves next year. The branches on the block are focused on business banking – a fact regulators and the UK Government have said should boost competition – and RBS has said it expects them to return to profit after suffering disproportionately from rising bad debts. "Half-a-dozen" bidders are expected to put in tentative offers for the branches, one of the sources said.

"This is a complicated asset, which requires a strong management team to take it on," one of the sources said, explaining the smaller number of potential suitors. "It isn't really a business as such, it is a collection of assets."

National Australia Bank has shown an interest, a source said, while Spain's Santander and Virgin Money are also expected to consider indicative offers. Resolution, which plans to acquire financial services firms ahead of a stock market debut in 2012, is following the situation but is not expected to send in an indicative offer at this stage.

RBS declined to comment on details of either sale.

"All disposals will progress at a pace which secures the interests of both our customers and shareholders," a spokesman said. "We will of course update the market as and when appropriate. However, it would not be appropriate to comment during the sales process."

The bank, pressing ahead with EU-mandated sales, has already sold part of its stake in commodities venture RBS Sempra and is in talks to sell the remainder. It also plans to sell or IPO its insurance arm by 2012, again to satisfy demands on state aid.


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