RBS mulls bid for UK govt-owned mortgage portfolio - Sky News

May 26 (Reuters) - Royal Bank of Scotland Group Plc (RBS (LSE: RBS.L - news) ) is one of many prospective bidders that have shown an interest in buying Granite, a 13 billion pound ($20 billion) mortgage securitisation vehicle earmarked for sale by the UK government, Sky News reported, citing people familiar with the matter.

RBS may team up with other bidders, including private equity firms to buy Granite, or may decide to not bid at all, Sky News said on Tuesday. (http://bit.ly/1HJq2zC)

The state-owned bank is looking to deploy some of its surplus funds through the potential purchase, and invest primarily in UK retail and commercial business to grow its position in mortgages, the website said.

Last year, RBS Chief Executive Ross McEwan said he would cut costs and reposition the bank as a UK-focused retail and commercial lender.

If the deal goes through, it will be in line with the EU state aid agreement, which restricts the bank from deals that go above a certain valuation, Sky (Other OTC: BSYBF - news) said.

RBS could not be immediately reached for comment outside regular business hours.

In March, Britain's Chancellor of the Exchequer George Osborne, in an effort to woo voters before general elections, announced plans to launch the sale of 13 billion pounds of mortgage assets.

($1 = 0.6499 pounds) (Reporting by Ankush Sharma in Bengaluru; Editing by Richard Chang)