Sir Richard Branson is mulling another tilt at Royal Bank of Scotland's 316 high-street branches, after Spanish-owned Santander dramatically pulled out of a £1.65bn deal late on Friday.
RBS has been forced to sell the branches by the European Commission in exchange for allowing the £45.5bn of state aid that rescued the bank in 2008 and, under the ruling, has until next year to complete a deal. Virgin Money had been in the running previously, as it was keen to pick up the 244,000 business customers that would have been part of the transaction, but lost out to Santander and bought most of Northern Rock instead.
This weekend, sources close to Virgin Money said that Sir Richard and his team were still focused on properly integrating Northern Rock, but conceded that it would have to look at any such "opportunities". As a result of that takeover, Virgin Money has been rebranding 75 Northern Rock branches, and could be tempted to expand further at what should now be a bargain-basement price for RBS.
"This happened so late last week, and the priority has to be Northern Rock, but you can never say never. It might depend on the IT systems," said one source.
An IT breakdown in the summer, which resulted in millions of customers being unable to access their accounts at RBS and Ulster Bank was a factor in Santander walking away from the deal. The decision by Ana Botin, the chief executive at Santander UK, has left nearly two million customers in limbo, more than two years after the agreement was originally struck.
Private equity groups J C Flowers and Blackstone are also tipped to enter the running, although RBS could consider a flotation. Last week, the bank's chief executive, Stephen Hester, raised nearly £800m through listing its home insurance business, Direct Line, on the London Stock Exchange.
However, NBNK, the attempt to create a new simple retail bank, set up by former Lloyd's of London chairman Lord Levene, is understood to be sticking to its plan to wind up its operation. This resulted from its failure to secure a deal to buy Project Verde, the 632 branches that Lloyds Banking Group has to sell under a similar EU mandate.
Sources close to NBNK said it was not felt that the RBS branches would, on their own, represent a viable stand-alone business, although they could have been combined with Verde.