Banks: branching out - FT.com As anyone who has tried to move their bank account will tell you, switching can be a tortuous process. Royal Bank of Scotland and Lloyds Banking Group have been going through something similar, selling packages of branches to Santander and Co-operative Bank respectively. The disposals, mandated by the European Commission as a penance for receiving state aid, have to happen by next year. The final details are under discussion, but early indications suggest that RBS is getting the better deal. It is selling 318 branches (plus the associated customer accounts) and could receive around £1.3bn for them. Lloyds is selling twice the number of branches but could end up with only about £1bn. There are two explanations. First, RBS initially struck its deal with Santander in 2010, when bank valuations were far higher than they are now. Second, the RBS branches include a big slug of lending to small businesses, where Santander is hoping to make a splash. It is notable that new entrants to the UK banking market in recent years, such as Aldermore, have focused on small business lending. But wherever the final prices fall, they are likely to be on multiples of book value well above those paid by the banks" stock market investors. The RBS branches are likely to go for a sum that is about level with their book value. Lloyds is hoping for the same, but might end up with a discount. In the market, however, RBS trades on 0.3 times book value while Lloyds is on 0.5. The gap between the trade value of the branches and the market value of the banks that own them will spur on fans of bank break-ups. If Barclays" UK retail business is worth one times its net assets of £7bn, a market capitalisation of £20bn, leaves £13bn for the rest of the group, which is in the books at £45bn. A Barclays break-up might not happen, but the RBS and Lloyds disposals at least point to hidden value in the sector as a whole.