By Mark Kleinman, City Editor
Two hedge funds which made millions of pounds shorting UK bank shares during the 2008 financial crisis are in talks to back a £1bn bid for more than 300 Royal Bank of Scotland (RBS) branches.
I have learnt that Lansdowne Partners and GLG, which is part of the listed Man Group, are among more than 20 institutions which have indicated their interest in participating in an offer for the branch network.
The prospective involvement of the hedge funds is likely to provoke comment in the City because they were among dozens of investors which profited from bets that banks' share prices would fall during the febrile period leading up to taxpayers' rescue of lenders including Northern Rock and RBS.
Neither GLG nor Lansdowne has formally committed funds yet to the institutions' bid, although GLG's interest is understood to be the more advanced of the two.
Lansdowne made handsome profits from shorting shares in banks such as Barclays and HBOS, whose senior executives were last week criticised by the Parliamentary Commission on Banking Standards for their role in its near-collapse.
The offer would involve an investment worth hundreds of millions of pounds being made into a new company that would have a binding commitment to acquire the RBS branches.
The company would then be floated on the stock exchange.
The institutions' offer is principally made up of major UK pension funds and other investors, such as F&C, Schroders and Threadneedle.
It is being led by Andy Higginson, a former finance director of Tesco and non-executive director of BSkyB, the owner of Sky News.
RBS is expected to decide as soon as this week about the next stage of the process to offload the 316 branches.
People close to the auction said the taxpayer-backed bank could elect to enter exclusive talks with a bidder imminently.
The City institutions are vying with a bid from two private equity groups, Corsair Capital and Centerbridge, who are backed by prominent investors such as Lord Rothschild.
Another private equity consortium is also in the running.
RBS has been forced to sell the branches as part of a package of state aid remedies agreed between the UK Government and the European Commission.
Neither GLG nor Lansdowne would comment on Monday.
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