RBS sell-off looms as EC backs £750m plan

ROYAL Bank of Scotland’s plan to ditch a sale of 300 branches could be rubber stamped by the European Commission ‘within weeks’, paving the way for the Government to sell-off the huge taxpayer stake in the group.

RBS announced late on Friday that it wants to provide £750million to finance competition in business banking, instead of selling the Williams & Glyn branches. The EC had required RBS to sell the branches as a condition of its 2008 bailout.

The new plan to scrap the sale and instead subsidise smaller rivals has been discussed with EC competition officials. Competition commissioner Margrethe Vestager will ask commissioners to look at the plans ‘in the coming weeks.’ Commissioners generally decide within weeks rather than months, a spokesman added.

Approval would clear a major hurdle to the sale of the Government’s 73 per cent stake in RBS. Chancellor Philip Hammond said last year that the Treasury could not sell more of its stake until Williams & Glyn had been sold and the bank had reached a settlement with the US Department of Justice over its mis-selling of sub-prime mortgage products.

Paul Lynam, chief executive of Secure Trust bank and chairman of the challenger bank panel at the British Bankers’ Association, said the RBS plan needed to provide a sustained boost for challenger banks.

Rishi Khosla, chief executive and co-founder of OakNorth, an SMEfocused challenger bank, said: ‘It’s important that this fund doesn’t just focus on current accounts, but that it is used to increase challenger banks’ capabilities to deliver a range of products and services, including short and longterm business loans’.

Under the plan, challenger banks will be offered dowries to allow them to incentivise small businesses to switch accounts from RBS. Business customers of those banks will be able to continue to use the RBS branch network to pay in cash and cheques.

RBS has already spent £1.8billion in an attempt to separate Williams & Glyn, but was set to miss a key deadline. Analysts say RBS will reveal 2016 losses of more than £6billion, on top of Friday’s £750million provision, on Friday.