10:51am UK, Tuesday June 10, 2003

The Royal Bank of Scotland Group is planning further expansion in German retail banking.

It could afford a medium-sized purchase without raising capital, its chief executive was quoted as saying.

"Germany is at the top of the list when it comes to retail and direct banking," RBS CEO Fred Goodwin said in an interview with the Financial Times Deutschland.

Mr Goodwin declined to comment on whether the group was interested in buying Norisbank, the profitable consumer finance specialist owned by HVB Group.

Other bidders

HVB has given five bidders access to Norisbank's books and some industry sources say the auction could come down to a run-off between RBS and Postbank, the anking arm of Deutsche Post.

RBS, Britain's second-biggest bank, became the third largest credit card provider in Germany last month.

It bought the German credit card and personal loan business of Spain's Santander Central Hispano.

The RBS could finance a small or medium acquisition without a capital increase, he said.

It would return funds to shareholders should a suitable opportunity not arise, he said.