A contender for 315 Royal Bank of Scotland branches will float on the London stock market this week in the hope of raising £15m to support its bid.
News that W&G Investments, fronted by former Tesco finance director Andrew Higginson, has secured the backing of more than 10 fund managers and hedge funds comes as a report shows the UK banking sector is 'starting to get back on track' after the financial crisis. KPMG, the accounting firm behind the report, said all five major UK banks were in profit for the first time since 2010.
Signs of health in a sector that has been reeling from the Libor scandal and other setbacks are reflected in the interest in the branches being sold by RBS.
W&G Investments, poised to float on the Aim market, faces two rival bids. One is from a consortium backed by the Church of England and by former Lloyds Banking Group banker John Maltby, who has been lined up as chief executive. The other is led by former HSBC banker Alan Hughes and is backed by private equity firms AnaCap and Blackstone.
The bidders are expected to revive the Williams & Glyn's brand that disappeared from high streets in 1986 and is being re-created by RBS to facilitate the sale, which was demanded by the European commission as a condition for approving the taxpayer funds pumped into RBS during the banking crisis.
RBS, which had hoped to sell the branches to Santander before the Spanish bank pulled out, could yet decide to float the branches itself.
Consumer groups are likely to welcome a new player on the high street amid worries that competition has fallen away. KPMG's report claims the crisis has left 'a lot less choice for individuals'.
Its latest analysis of the performance at Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered found that while all returned to profit in the first half of the year, their earnings continued to be dented by fines and compensation costs for the mis-selling of payment protection insurance (PPI).
Overall lending was up and customer deposits grew by 6%, but shareholders were failing to get the returns they had grown used to before the crash.
'Return on equity has roughly halved compared to 2005 levels, from near 20% to under 10% now – and this looks unlikely to reverse in the near-term,' said the bank performance benchmarking report.
'Banks are safer but much less profitable per shareholder pound.'
Combined first-half profits for the five were £16.5bn but that figure would have been almost 20% higher were it not for the continuing need to set money aside against PPI claims (£2.3bn) and interest rate hedging products (£700m).
Looking further ahead, the report flags up a new threat to banks and their customers. 'The next systemic shock, if there is one, could come from an as yet unforeseen event such as a massive systems outage or a new breed of cyber attack,' the report said, citing a 12% rise in online account fraud at UK banks last year.
'Furthermore, the motivation for cyber assaults is shifting, from financial crime to political and ideological attacks, with the number of state-sponsored hacking and 'hacktivist' revenge incidents growing,' the accountants added.
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