National Australia Bank's bid for RBS stakes endangered

Plan of buying $3.1bln assets could be stalled as Britain's Labour government favors Northern Rock.

Speculation emerged in Britain at the weekend that RBS, and possibly Lloyds, assets that are being sold under the European Commission's direction could be bought by embattled bank Northern Rock.

RBS remains 84 percent nationalised. As part of the government's rescue package, it has been forced to sell 318 retail banking branches in England, Wales and Scotland under its NatWest brand.

The bank's rival, Lloyds, has been ordered to offload 600 branches it operates under its Cheltenham & Gloucester and Lloyds TSB brands. Lloyds is 41 percent nationalised.

NAB was considered a serious contender to buy some of the RBS assets and was thought to be in the race alongside Santander, the Spanish bank that owns Abbey, Alliance & Leicester and the retail deposit book of Bradford & Bingley.

It is estimated the RBS assets could be worth up to pound stg. 2 billion ($3.09 billion) and the beleaguered bank is understood to be keen to sell the branches as a whole in a private bidding prospect.

Chief executive Cameron Clyne told Australian investors at a briefing on Friday that the bank's "franchises remained well positioned'' to benefit from the changing composition in the market.

View the full story in the Australian.