Church of England backs consortium's bid for RBS branches

The Church of England is backing a consortium's multi-million pound bid for the 316 branches of Royal Bank of Scotland (RBS), Sky News today reported without citing a source.

The Church of England Commissioners, who manage £5.5 billion of investments, have agreed to pump in millions into the consortium led by Lord Davies, the former trade minister, and includes, private equity firm Corsair Capital, US investment firm Centerbridge, RIT Capital, a vehicle headed by Lord Rothschild, and Standard Life, the insurance and pensions group.

The consortium is seeking to buy a major stake in the branches ahead of an initial public offering on the stock market, said the report.

The Lord Davies consortium is vying with two other offers made by rival consortiums, one which includes Foreign & Colonial, Schroders and Threadneedle Investments, while the other comprises of two private equity firms Blackstone Group and AnaCap.

All the bidders are reported to be currently conducting due diligence.

The auction of the branches was been triggered off after Spain's Grupo Santander backed out in 2010 from buying RBS branches for £1.65 billion on income tax issues.

RBS, which is 83-per cent owned by the UK taxpayers, has been forced to offload the branches after the European Commission ruled in 2009 that it must sell the unit for receiving £45.5 billion of state aid during the global; financial crisis of 2007-2008.

The Church of England, which has also invested in Barclays, have recently been pushing the London-based bank for cultural changes in the aftermath of the Libor scandal.

''Ethical conduct cannot simply be enforced. We will know that Barclays has truly transformed when it inspires its staff to make sustainable profits through serving its customers and fulfilling its fundamental role in society,'' the Church of England fund had said in its latest annual report.