Christopher Flowers Courts Allies For RBS Bid

The Wall Street tycoon Christopher Flowers is courting a string of private equity and banking allies as he seeks to assemble a knockout bid for more than 300 branches owned by Royal Bank of Scotland (LSE: RBS.L - news) (RBS).

I have learned that Mr Flowers' buyout firm, JC Flowers, is in talks with potential partners about structuring a deal that could result in it selling a slice of OneSavings, the retail bank it established last year.

JC Flowers has also hired Citi, the investment bank, to advise it on a bid that will pit it against Nationwide, Britain's biggest building society, and Virgin Money, the banking arm of Sir Richard Branson's business empire.

Anacap, the owner of Aldermore Bank, one of the newest entrants to the banking sector, is also examining a bid.

OneSavings was created following Flowers' takeover of the Kent Reliance Building Society, a deal that was supposed to form the foundation of a major force in British banking.

Since then, however, JC Flowers has aborted talks to absorb the Principality Building Society and dropped a bid to acquire Northern Rock from the Government. Northern Rock was subsequently taken over by Virgin Money.

People close to the situation said that JC Flowers was certain to recruit partners if it pursued a bid for the RBS branches because of the size of the deal.

Last month, Santander UK abandoned a deal to buy the 316 branches from RBS, citing repeated delays caused by problems with the network's IT systems.

Taxpayer-backed RBS has asked bankers at UBS (NYSEArca: DJCI - news) to restart the sale process. The European Commission has set RBS a deadline of the end of next year to have sold the branches in order to comply with state aid rules.

JC Flowers declined to comment.