RBS is set to release Birmingham Midshires from its takeover offer in return for a £15m settlement if the building society is taken over in a rival bid by Halifax.

Lawyers are believed to be adding the final touches to a deal in which RBS would receive £5m compensation plus a further £10m if Birmingham Midshires accepts the Halifax bid.

An announcement is expected before the end of the week.

RBS last year offered £630m which the society accepted under an exclusivity agreement, barring it from accepting offers from other potential buyers.

But Halifax trumped the RBS bid by offering £780m in March, offering Birmingham Midshires' one million members the prospect of average windfall payouts of £780, compared with only £630 from RBS.

Birmingham Midshires first approached RBS in its attempts to free itself from the locking-in clause on April 7 with an offer of £5m compensation.

But a source close to the talks said RBS chief executive George Matthewson had insisted on the Halifax settlement clause.

A Birmingham Midshires spokesman said: "We are keen to be released sooner rather than later. Negotiations are continuing with the Royal Bank and hopefully an announcement will be made soon."

David Raye, banking analyst at HSBC Securities, said further offers were likely from other banks if Birmingham Midshires was made available.

He said: "There is an air of consolidation around. It is tough to grow organically and if Birmingham Midshires was more open to offers, banks would be duty bound to consider it."