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RBS unveils £750m alternative plan to Williams & Glyn sale

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Royal Bank of Scotland’s obligation to siphon off a tranche of branches and sell them under the resurrected Williams & Glyn brand to meet the EU conditions of its £45 billion taxpayer bailout may be shelved for an alternative plan.

According to the still 73 per cent taxpayer-owned lender, it has drawn up a proposal with the Treasury in the form of a £750 million plan to boost competition in the banking market in an attempt to appease officials in Brussels.

A statement from the Edinburgh-based said: “RBS has been informed by HM Treasury (“HMT”) that the Commissioner responsible for EU competition policy plans to propose to the College of Commissioners to open proceedings to gather evidence on an alternative plan for RBS to meet its remaining State Aid obligations. If adopted, this alternative plan would replace the existing requirement to achieve separation and divestment by 31 December 2017 of the business previously described as Williams & Glyn. As previously disclosed, none of the proposals to acquire the business received by RBS can deliver a full separation and divestment before the 31 December 2017deadline.”

The news is the latest twist in the long running saga dating back to the banking crisis of 2008 that has seen RBS struggle to offload the W&G branches, which it is required to do under the EU’s state aid rules.

The statement sets out the plan which RBS envisages will deliver the following revised package of remedies to promote competition in the market for banking services to small and medium enterprises (“SMEs”) in the UK:

  • A fund, administered by an independent body, that eligible challenger banks can access to increase their business banking capabilities;

  • Funding for eligible challenger banks to help them incentivise SMEs to switch their accounts from RBS paid in the form of “dowries” to eligible challenger banks;

  • RBS granting business customers of eligible challenger banks access to its branch network for cash and cheque handling, to support the measures above; and

  • An independent fund to invest in fintech to support the business banking of the future.

    • RBS said it has taken a £750 million provision within its 2016 Annual Results to back the proposal.

    Ross McEwan
    Ross McEwan

    The Treasury has been in talks with the European Commission (EC) for months about the situation relating to the Williams & Glyn sale and will now seek formal changes to the state aid commitments.

    Competition commissioner Margrethe Vestager will propose to the College of Commissioners that they open proceedings to gather evidence on the new plan.

    RBS chief executive Ross McEwan said “Today’s proposal would provide a path to increased competition in the SME marketplace. If agreed it would deliver an outcome on our EC state aid divestment obligations more quickly and with more certainty than undertaking a difficult and complex sale.”

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