RBS To Announce Branch, Worldpay Sales Early As Tues -Sources

30th Jul 2010 14:59

By Patricia Kowsmann and Marietta Cauchi Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Royal Bank of Scotland Group PLC (RBS) is likely to announce two asset sales worth up to a total of GBP4.3 billion as early as Tuesday, as it continues its efforts to shrink its balance sheet, people familiar with the situation said. RBS is selling 318 U.K. branches to Spain's Banco Santander SA (STD) for around GBP1.8 billion and its Global Merchants Services division to Advent International Corp. and Bain Capital LLC for between GBP2 billion and GBP2.5 billion, the people said. Both businesses are being sold by the 83%-government owned bank as part of a disposal program forced on it after being bailed out by the state. It hired UBS AG (UBS) to run the auctions earlier this year. RBS wants to announce the sales ahead of its first-half of 2010 results Aug. 6, when it is expected to post another net loss on continued impairments. Those charges, however, have been falling in recent quarters, and the bank has said it expects to be profitable again next year. RBS has been in exclusive talks with Santander over the branches in the past weeks. Initial bidders included another Spanish bank--Banco Bilbao Vizcaya Argentaria SA (BBVA)--Australia's National Australia Bank Ltd. (NAB.AU), Richard Branson's privately held Virgin Money and a consortium of Blackstone Group (BX) and U.K. charity Wellcome Trust. The branches up for sale are in England and Wales, along with NatWest branches in Scotland, and the accounts of some small- and midsize-business customers across the U.K. Combined, they have GBP23.6 billion in assets and 6,000 employees. According to people familiar with the situation, Santander first put a bid of around GBP2 billion, but lowered the offer after conducting due diligence. Meanwhile, the auction for the merchant services unit attracted upwards of 30 bidders in its initial stages, both private equity firms and trade buyers, but narrowed as potential buyers were either weeded out or withdrew due to the competitive pricing and the complexity of the deal, which involves the carving out of assets as well as arrangements for the post-completion business, likely including an ongoing relationship with RBS. Bidders will also have to deal with the technology involved in running the business on a different platform. Global Merchant Services' biggest asset is RBS Worldpay, which processes credit-card payments in 40 different countries. Following the sales, RBS will only have its insurance business to sell under EU requirements, something it isn't likely to do much before the December 2013 deadline given. The disposal could be via an initial public offering. The bank is also working on reducing its balance sheet by running off investments and loans. -By Patricia Kowsmann and Marietta Cauchi, Dow Jones Newswires. Tel +44(0)207-842-9295, [email protected] (END) Dow Jones Newswires July 30, 2010 09:59 ET (13:59 GMT)