RBS eyes bid for £13bn Northern Rock portfolio

Royal Bank of Scotland has emerged as a bidder for part of Granite, which is a £13bn state-owned mortgage portfolio for sale by the UK government.

RBS is among a number of prospective bidders who have registered an interest in acquiring Granite - a mortgage securitisation vehicle established by Northern Rock nerly 15 years ago, Sky News reported.

The bank may team up with other bidders, including private equity firms, or may decide not to bid altogether.

If RBS proceeds, it would be the first significant acquisition made by the lender since it was bailed out with £45.5bn of taxpayers' money more than six years ago.

The sale process, announced by the Chancellor in his pre-General Election Budget in March, is at an early stage, and firm offers have yet to be received.

If RBS does ultimately buy assets from the Granite portfolio, it would represent a rare example of one taxpayer-backed entity buying parts of another, said Sky.

Granite is part of UK Asset Resolution (UKAR), which is a subsidiary of UK Financial Investments, the holding company which also manages the Government's 80% shareholding in RBS.

People close to the situation told Sky that RBS was examining an offer for Granite in an attempt to deploy some of the surplus liquidity on its balance sheet.