RBS Faces Setback in Branch Sale

The branch sale to Santander UK fell through, but investors shouldn't fret since another buyer is likely at the ready

Erin Davis 15 October, 2012 | 5:28PM
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Royal Bank of Scotland (RBS) announced on Monday that Santander UK has decided to withdraw from its agreed purchase of 316 RBS branches. A sale of the branches is mandated by the European Commission as a result of the state aid RBS received during the financial crisis.

We view this as a setback for RBS, but not a large enough one to move the needle on our fair value estimate, which currently sits at 360p.

We continue to expect the RBS branches to be sold, although probably at a lower price, perhaps to one of the buyers who lost out on the first round of bidding. In particular, we've heard rumours that Richard Branson and Christopher Flowers have expressed renewed interest.

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Securities Mentioned in Article

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NatWest Group PLC216.60 GBP0.00Rating

About Author

Erin Davis  is a senior banking analyst for Morningstar.