The Church of England Commissioners, who manage a £5.5 billion investment fund, have agreed to inject the money into a consortium being led by Lord Davies, the former trade minister.

The negotiations come at a time when the Archbishop of Canterbury has pledged to oust the troubled payday loan industry, by establishing a credit union, possibly in partnership with the Church of Scotland.

This credit union would lend to members of the clergy and become a source of expertise within the industry, as part of a long term campaign to boost competition within the banking sector.

Malcolm Brown, Director of Mission and Public Affairs at The Church of England, said: "If we can develop the credit union sector that will widen the finance sector more generally.

"With a more diverse financial sector, there should be less need for payday lenders who extract exorbitant interest rates.
"Often the problem for credit unions is access and we are thinking of ways we can help."

Other members of the bidding consortium are thought to be Corsair Capital, a private equity firm; Centerbridge, an American investment firm; RIT Capital, a vehicle headed by Lord Rothschild; and Standard Life, the insurance and pensions group.

The bidding consortium wants to buy a major stake in the network of branches, ahead of an initial public offering on the stock market.

The Archbishop Justin Welby is one of the Church Commissioners charged with directing the fund and leads the campaign for competition within the banking sector.

However sources indicate that the Archbishop of Canterbury was not involved in the decision to bid for the RBS branches - which has apparently been planned over many months.

RBS was ordered to sell the branches in 2009 by European authorities after the bank received a £45.5 billion bailout.
Santander UK was originally in line to buy the branches, but pulled out of the £1.65 billion deal in October, complaining about IT problems.