Review could force RBS to beef up Williams & Glyn

Williams_&_Glyn'sThe UK government could force Royal Bank of Scotland to increase the size of the Williams & Glyn business that is has to sell off to meet the obligations of its 2008 taxpayer bailout.

RBS, which is spinning off the Williams & Glyn business next year in a move enforced by the European Union, currently expects to shed 307 of its branches South of the Border in the sale.

But that could now increase after The Treasury asked the Competition and Markets Authority (CMA) to assess the implications of the sale on the wider banking market, and whether the new bank could be considered viable in the current market place.

While the CMA has no powers to order changes, depending on what they find, it could prompt the Treasury at ask RBS - of which it still owns 80 per cent – to add more branches to the sale.

Under current plans for the sell-off, Williams & Glyn will be a separately licensed bank with about 1.4 million retail customers and more than 200,000 SME customers.

The SME lending sector is of particular concern to the government and will aim to have a challenger bank, over which it can assert some influence, to be in a position to facilitate lending in the sector.

The CMA findings will be reported by July and the Treasury said the Prudential Regulation Authority, responsible for the financial strength of individual banks and insurers, would separately assess whether the bank has a viable and sustainable business model.

Jim Brown
Jim Brown

RBS sold a 49 per cent stake in Williams & Glyn to a consortium of investors led by US private equity firm Corsair in 2013, and last month it named Jim Brown as chief executive of the business.

An RBS spokeswoman said: “We are working hard and devoting significant resources to establishing Williams & Glyn as a viable, standalone bank that will bring increased competition to the retail market.”

Williams & Glyn must be sold by the end of 2017.

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