Corsair group to buy stake in new RBS bank for £600 mn
28 September 2013
A consortium led-by US private equity firm Corsair Capital has won the auction for acquiring a significant stake in British banking major RBS's new bank for £600 million ($960 million).
The new bank, which will be launched in 2015, will be called Williams & Glyn's and will comprise RBS's 314 branches in the UK.
RBS and rival Lloyds were required to divest hundreds of branches when they were provided state bailout of £66 billion in 2008 following the global financial crisis. Earlier this month Lloyds launched TSB Bank Plc with 631 branches and 4.6 million customers.
The Williams & Glyn's business comprises 308 RBS branded branches in England and Wales and 6 NatWest branded branches in Scotland, serving around 1.4 million retail customers, approximately 236,000 SME customers and about 1,000 mid-corporate customers.
The bank has total assets worth £19.7 billion and customer deposits of £22.2 billion as at the end of June. It currently employs around 4,500 people, which is expected to grow to about 6,000 in the future, and generated an operating profit of £168 million during the first half of 2013.
RBS chairman Philip Hampton said: Williams & Glyn's will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK's economic recovery.''
''Much has been done already in building the standalone business, and today's announcement provides more certainty for our customers and employees ahead of a flotation,'' he added.
Besides Corsair, the buyer's consortium includes US investment management firm Centrebridge Partners LP, the Church Commissioners for England and British investment trust RIT Capital Partners Plc.
New York-based Corsair Capital is a private equity firm dedicated to making long term investments in the financial services industry and since its inception in 1992, has invested and led transactions that have raised over $17 billion of aggregate equity.
The firm has led a number of successful bank recapitalisations across the US, Europe, Latin America, and Asia.
Centerbridge Partners LP, also New York-based, is an investment management firm with approximately $20 billion in capital under its management.
The Church Commissioners for England are responsible for managing a well-diversified investment portfolio with the aim of producing returns to support the Church of England's work across the country.
London-based RIT Capital Partners Plc is an investment trust listed on the London Stock Exchange and chaired by Lord Rothschild.
Corsair Capital's vice chairman Mervyn Davies said: ''The consortium views this as an opportunity to create a genuine challenger bank, which will be a vibrant, healthy competitive force in UK banking and a new financial services provider to the UK public and small and medium sized businesses.''
Following the separation of the business, the process of which is already underway, RBS will pursue an initial public offering (IPO) which is likely to take place in 2015.
The consortium's investment will be in the form of a £600 million bond to be issued by RBS which will be exchanged for a significant minority interest in Williams & Glyn's at the time of the IPO, RBS said.
The bond will convert into Williams & Glyn's shares at the IPO price and will not exceed a stake of 49 per cent.
CEO designate for the new bank John Maltby commented: Williams & Glyn's will have unique advantages. It will combine the heritage of an established bank, a strong national customer franchise and an experienced and committed team with the agility, motivation and growth opportunities of a challenger.
The transaction is subject to customary closing conditions including approvals from the European Commission.