Church of England prays for deal on 316 RBS branches

The Church of England has joined a bid for a network of bank branches being offloaded by the 81% taxpayer-owned bank.

by Emma Haslett
Last Updated: 22 Jul 2013
‘Project Rainbow’ may sound like something out a children’s storybook, but the reality is depressingly unicorn-free. It’s the name given to a portfolio of 316 Royal Bank of Scotland branches the bank has been ordered to sell off under conditions set out by the government when it bailed it out to the tune of £45bn back in 2008.

To make things more surreal, the Church of England (no comment on its fantasy credentials) has become involved. Its endowment fund – essentially, its investment organisation – has joined a consortium led by former trade minister Lord Davies, along with private equity firms Corsair Capital, Centerbridge, RIT Capital and insurance group Standard Life to buy up the portfolio.

It’s not clear how big a stake the Church would have in the network if the deal did go ahead. But what’s interesting is that this has come just a couple of weeks after the Archbishop of Canterbury hinted, in a draft copy of a report by the parliamentary commission on banking ethics, at his preference for breaking up RBS and turning it into a series of small, regional banks.

Having God on their side may help: there are at least two other bidders vying for the portfolio, including groups led by US investment giant Blackstone and another led by Schroders. And this is if RBS doesn’t decide to float the branches on the stock market or opt to retain a minority stake.

If a deal is reached, it’ll be a relief to RBS: Project Rainbow hasn’t been quite the dream scenario its namers had in mind. Last year, Santander pulled out of a deal to buy it at the last minute, saying it would be too complicated to integrate the branches’ computer systems into its own IT network.

If a private equity bid or a floatation does take place, it’s likely the banks will be relaunched as William & Glyn’s Bank, which disappeared from the high street nearly three decades ago when RBS disbanded it in 1985.

When the idea was floated in February this year, soon-to-be ex-RBS chief executive Stephen Hester warned that ‘there aren’t a lot of buyers for UK banks right now’. So if a deal is reached, it’ll be a true fairytale ending…

- Image: Flickr/Liverpool Cathedral CofE

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