Nick Goodway - It’s personal: echoes of a heady past in battle for branches of RBS
W&G’s chairman claims it is the only ‘real bid’ in town
Saturday 24 August 2013
Williams & Glyn’s, which I recall as one of the most respectable banking institutions of my youth, is set to return to our high streets.
Three bidders have put proposals to Royal Bank of Scotland to acquire or part-acquire the 315 branches RBS has been ordered by the European authorities to sell because of the state-aid nature of its £45bn taxpayer bailout.
W&G Investments (geddit?) floated on the junior market AIM this week, having raised £15m from a swathe of institutional investors at 100p a share. It promptly suspended trading in the shares, saying that would only recommence if RBS gives it exclusive status when it chooses between the bids in a couple of weeks’ time.
W&G has echoes of the other upstart bank-branches bidder NBNK, which made tilts at branches of both RBS and Lloyds Project Verde’s. NBNK spent quite a lot of its shareholders’ money on its directors’ pay and preparing bids that ultimately failed. It also kept shifting its target. Now it could become the vehicle for Virgin Money when it floats.
W&G’s chairman Andy Higginson, the former finance director of Tesco who was in charge of its “bank” for years, claims W&G’s is the only “real bid” in town. He is putting £1.1bn on the table now, and saying that RBS will get another £400m over the next two years, which basically comes out of Williams & Glyn’s profits.
Mr Higginson argues that the rival private equity bids – led by Corsair and former Lloyds retail banking chief John Maltby, with the backing of the Church Commissioners and from AnaCap, backed by Blackstone – are based on jam tomorrow.
Each offers to put anything from £500m to £800m into Williams & Glyn’s now, alongside RBS, to provide new management and ideas, and then receive a substantial minority equity stake when it is floated in two years’ time.
Mr Higginson points out that his is the only deal that will mean RBS gets shot of the branches by early next year – though even that will have missed the EU’s deadline.
But Mr Maltby argues that his proposal – which he notes is fully funded already and has completed due diligence – gives RBS and, by dint of our 82 per cent stake, the taxpayer a fair share of any uplift in the value achieved over the next two years.
Given that the UK economy is showing increasingly strong signs of recovery and that interest rates may start rising again – as soon as early 2015, rather than the Bank of England’s suggested late 2016 – there is every chance that Williams & Glyn’s will be worth much more in two years.
RBS management, under the leadership of finance director Bruce van Saun, who is shortly off to float its US Citizens Bank, is running the sale process. But there is no doubt that UK Financial Investments (UKFI) , which holds the taxpayer stake, will have the final say.
Should we, the taxpayers, accept £1.1bn for something that currently has a net asset value of £1.55bn? Or should we hold on and accept, say, £800m for about half of something that could be much more valuable when it floats? UKFI should avoid any grandstanding by politicians, and back the longer-term view.
But it is refreshing to hear experienced FTSE 100 executives arguing their cases with such passion, knowledge and fervour.
It took me right back to the great contested takeover bids of the 1990s when deals were not purely corporate but verged on the personal.
Mr Higginson and Mr Maltby have not yet resorted to slagging each other off but surely it’s only a matter of time.
I, meanwhile, cannot reveal which of the two ended our conversation with “I am in France and going back to poolside now”.
News thin on ground, so no room for a thick head
If only every week began with a birthday celebration. Particularly one’s own. Don’t worry if you forgot to send a card – you are not alone.
Drinks with colleagues and friends and then off to a fine Chinese restaurant and an early night.
It is important to avoid early-morning tiredness and hangovers as a journalist with pages to fill in the dog days of August when financial news is as hard to find as shale gas drillers in Balcombe.
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