Santander, NAB Reach Next Round in RBS Branch Sale

(Reuters) – Santander (SAN.MC) and National Australia Bank (NAB.AX) are through to the next round of bidding for 300 branches being sold by Royal Bank of Scotland (RBS.L), pulling ahead of rival suitor BBVA (BBVA.MC), a source familiar with the matter said.

RBS has asked BBVA to come up with improvements to its original bid, but the Spanish lender remains in the running, the source said.

RBS declined to comment.

RBS, 83 percent state-owned after it was bailed out during the financial crisis, is selling the branches as a condition of winning European Union approval for its state aid package.

The network, which is being sold under the revived Williams & Glyn brand, would provide a foothold in banking for small businesses, and is expected to fetch more than 1 billion pounds ($1.46 billion).

The auction initially attracted six potential buyers, but the list has been whittled down after Virgin Money, buyout firm Blackstone (BX.N), and charitable foundation the Wellcome Trust dropped out. ($1=.6852 Pound) (Reporting by Myles Neligan; Editing by Hans Peters)