RBS in fresh fight to offload W&G branches

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The likelihood of Royal Bank of Scotland offloading all of Williams & Glyn is diminishing as suitors attempt to carve out the best pieces of the bank and leave behind the more risky or less attractive bits.

Senior bankers said Clydesdale, which emerged as a suitor last month, is trying to use RBS’s increasingly weak bargaining position to leave behind the parts of the bank it doesn’t want. It is understood that Clydesdale and Yorkshire bank has proposed leaving some of W&G’s corporate bank, which includes its SME customers as well as some of its branches. The tough negotiating stance puts RBS in an awkward position as it comes under mounting pressure from the European Commission to offload W&G, a network of 300 branches with about 1.8m customers, including 200,000 small businesses. It is more than seven years since the state-backed lender was ordered to dispose of the business as one of the conditions of its £45bn government bailout in 2008.

RBS, which is 73pc owned by the taxpayer, warned last month that it would miss a deadline set by Brussels to divest the branches by the end of next year. The Treasury is in talks with Brussels about how to ensure a successful deal for W&G. A source said the discussions included potential sanctions against RBS for missing the deadline. RBS has said previously that it was in talks about selling “substantially all” of the business. Santander has also renewed its interest alongside challenger bank Clydesdale.

W&G has proved a long-running and costly saga for RBS, with the bank’s outdated computer systems posing a major obstacle to a sale. A deal to sell the branches to Santander collapsed in 2012, while this summer RBS scrapped a plan to spin off and float W&G to once again pursue a trade sale,  even though it had already spent £1.5bn attempting to create a new computer network for the division. Dealmakers have suggested that if offloading W&G proves too problematic, RBS could offer alternative remedies to the Commission, including disposals of other businesses.

 

Posted on November 27, 2016 by CCKeith in Uncategorized

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