While furore surrounds the level of bonuses about to be announced to some Royal Bank of Scotland (RBS) bankers Santander, Virgin Money and National Australia Bank (NAB) are gearing up to take on the 318 branches that RBS has put up for sale.Because of UK and EU competition rules the other UK big banks do not qualify to bid for the RBS branches. Although large and getting larger in the UK Santander just squeaked in below the bar.

Buying these established branches is of course an attractive proposition as it would speed up any expansion process.

Santander has recently started a whole re-branding exercise fronted by Lewis Hamilton to re-name its UK acquisitions of Abbey, Alliance & Leicester and Bradford and Bingley as Santander. It now intends to raise about £15 billion by listing its growing British business on the London Stock Exchange. That would take the UK arm of Santander up to half the value of Lloyds banking group and allow it to raise the funds to buy the RBS branches.

It looks like the NAB proposition will be a team bid with two private equity groups, Clive Cowdery’s Resolution Group and the US group Blackstone. NAB does already have a UK presence in the form of the Clydesdale and Yorkshire banks and commands a UK market share of about 3%. The bank is also in the course of expanding by buying into AXA Asia Pacific.

Virgin are also keen to buy and will go for any RBS or Lloyds branches that are in the right places. Virgin may still have its sights set firmly on Northern Rock, but the new chairman of Virgin Money, Brian Pitman, has said that he doesn’t believe that the government will put it up for sale until the latter part of the year. This will give it time to strengthen. Virgin Money has recently completed the purchase of the Somerset based Church House Trust, which gives Virgin the banking licence it needs to expand into the sector.

From a UK customer perspective new players in the market will bring diversity and competition. More of the same would not have been a credible option.

On this basis the Santander offering is possibly the least attractive of the three and on a domestic level the Virgin option may be the most popular given the popularity of Richard Branson. With Santander of course there is also the cloud of the Spanish economy hovering in the background. There again a bit of ‘down-under’ may also not go amiss. How about letting them all have 106 branches each? But at the end of the day it will be the money that talks.

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