RBS off the hook with Williams & Glyn sale
The Royal Bank of Scotland will not be forced to sell off its Williams & Glyn division and will instead provide £833m of support to challenger banks.
The European Commission has accepted a government plan to free the bank from an obligation to sell about 300 branches, a condition of the £45.5bn bailout of RBS in 2008.
After RBS struggled to find a buyer the EU has accepted “in principle” an alternative deal first suggested in February that will see RBS spend £835m providing support for challenger banks and funds to boost competition in the sector.
“It will see RBS fund and deliver a package of measures to improve the UK business banking market and is designed to boost competition, helping small and medium-sized enterprises benefit from greater choice and offers on banking services,” the Treasury said in a statement.
In total the bank will provide £800m for the scheme, which will include a £425m “capability and innovation fund” to support other banks who lend to SMEs.
RBS will provide £275m worth of “dowries” to challenger banks to help them lure SME customers away from Williams & Glyn.
Ross McEwan, RBS chief executive, said: “We welcome the progress that HMT and the EC Commissioner responsible for competition have made on agreeing an alternative package of remedies to increase competition in the SME marketplace. We await a formal decision on this proposal which would allow us to resolve our final State Aid divestment obligation.”
The sale of Williams & Glyn to Santander fell through last year with reports saying the two sides could not agree on a price and talks with Clydesdale Bank have also failed.
The Williams & Glyn brand disappeared from the high streets in 1985 after being replaced by the RBS brand. However W&G continues to be an important lender for SMEs. The business would have had its headquarters in Manchester, with 300 branches and about 1.8 million customers.
This new deal will be submitted for final approval by European commissioners later this year.