The Royal Bank of Scotland Group plc
) has found AnaCap Financial Partners as a new prospective buyer
for its 316 branches. The company is forced to divest these
branches to comply with the European Union state-aid ruling.
In 2010, one of Spain's biggest banks - Banco Santander SA
-agreed to buy these branches for £1.7 billion. However, last
month, the Spanish bank abandoned the deal citing concerns over
delays regarding the completion date (largely caused by
mismatched Information Technology (IT) systems). Consequently,
Royal Bank was compelled to look out for other prospective
The other possible bidders for this buyout include Nationwide
Building Society, Virgin Money Holdings (U.K.) Ltd. and JC
Flowers & Co. Royal Bank has appointed
) for managing the deal, which has been codenamed 'Rainbow'.
Royal Bank had been working for more than two years on the
original sale of the assets, which was demanded under the
European state-aid rules after the bank received a £45.5 billion
($73 billion) bailout amount from the UK government following the
2008 financial crisis. Royal Bank must sell these branches by
2014 as a condition of receiving the bailout fund. However, if
this prospective deal fails to materialize, Royal Bank might ask
for an extension of deadline from the European Commission to sell
Presently, Royal bank is not the only bank disposing off its
assets to pay the state debt. Netherlands-based
ING Groep NV
) is also aiming to divest all its Asian assets, especially the
insurance and investment-management businesses, by the end of
2013. This is mainly for the repayment of $13 billion (€10
billion) state financial aid, which ING received from the Dutch
government during the 2008 financial crisis. The company also
plans to vend its banking assets to accelerate repayment of the
remaining amount - roughly $3.9 billion (€ 3 billion) - with
At present, ING Groep has already sold its Thai asset management
division and its lucrative Malaysian insurance business. Apart
from this, the company announced the divestiture of its insurance
business, pension and financial planning divisions in Hong Kong
and Macau, as well as its life insurance operations in Thailand.
We believe Royal Bank's branch-sale deal will be better-priced if
the number of bidders increase, thereby helping the bank to pay
the bailout fund to the government as soon as possible. Though
the branch sale will result in shrinkage of operations for Royal
Bank, it will remove a major financial overhang.
Royal Bank currently retains a Zacks #2 Rank, which translates
into a short-term Buy rating.
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