Northern Rock could buy RBS and Lloyds branches

Katherine Griffiths, Miles Costello & , : {}

Northern Rock could take over branches from Royal Bank of Scotland (RBS) and Lloyds that the dual groups have been forced to put up for sale.

The thought has been floated in supervision and promissory note circles. The government of Northern Rock is accepted to foster the move as a approach of reinvigorating the code and substantiating a poignant new force on the high street.

Northern Rock was separate in to a great bank and a bad bank on Jan 1 as piece of the Governments plan to lapse both tools to the in isolation zone over time.

The Treasury has deserted plans to try to sell the great part, that includes �19.4 billion in deposits, �10.4 billion in mortgages and �8 billion in cash, prior to the ubiquitous election. Instead, it is deliberation ways to beget value over the longer term.

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The Government has a singular event to emanate a new force in promissory note to take on the incumbents since Lloyds and RBS have been systematic by the European Commission to sell off businesses, brands and resources as one of the conditions for state aid.

Among the resources RBS has been told it contingency sell are 318 branches done up of the RBS network in England and Wales and NatWest in Scotland. It will parcel them underneath the Williams & Glyns name, a 1980s revival.

Lloyds has been systematic to sell 600 branches done up of Cheltenham & Gloucester, Lloyds TSB in Scotland and a couple of some-more branches in England and Wales. Northern Rock has usually 76 branches, so adding the portfolio of RBS or Lloyds would increase it substantially.

However, there would be most hurdles. RBS, that is 84 per cent owned by the Government, and Lloyds, in that taxpayers have a 41 per cent stake, have a avocation to shareholders to get the tip cost for their assets. The Government is doubtful to wish to be the tip bidder in any auction. RBS, in particular, is accepted to be assured that it will sell the Williams & Glyns portfolio to a in isolation bidder. Analysts hold that it is value about �2 billion. Santander, the Spanish organisation that owns Abbey, Alliance & Leicester and B&Bs deposition book, and National Australia Bank, that owns Clydesdale and Yorkshire, are seen as clever contenders for the RBS assets.

It is less transparent who would buy a little of Lloyds assets. That might prompt Northern Rock and the advisers to concentration on a tie-up in between the two.

A comparison landowner close to the incident said: You could concede someone else, either in isolation equity or a bank, to mix all of these resources and afterwards resell a most incomparable and some-more profitable organisation behind to the in isolation markets. Northern Rock could be used as a consolidator of these promissory note assets.

The landowner pronounced that the Treasury had nonetheless to confirm what it thinks about the idea.