RBS will miss deadline to offload 300 bank branches
TAXPAYER-BACKED Royal Bank of Scotland shocked the City last night as it admitted it could miss a crucial deadline to offload 300 branches.
Chief executive Ross McEwan said its Williams & Glyn arm might not hit the market before the end of 2017 in a major blow to long-suffering shareholders.
Loss-making lender RBS was ordered to ditch part of its operation by EU regulators when it was handed a £46bn Government bailout. Bosses have spent years working on the £1.2bn Williams & Glyn spin-off, with the aim of transferring around 300 branches into new ownership.
But they have had to tell markets that the EU-imposed deadline of December 31 next year might be missed.
The ‘overall financial impact’ of the operation will ‘be significantly greater than previously estimated’, bosses said.
That sent the firm’s share price crashing and commentators warned it will delay the bank’s return to profit.
Ian Gordon of Investec said the Williams & Glyn spin-off was costing RBS £50m a month and those expenses were likely to continue. He said: ‘It’s very bad news indeed. If they fail to achieve separation and disposal by the end of 2017, it could push the return of surplus capital to shareholders back to 2018.
‘With the costs of separation so high, you could soon see another £1bn going out of the door.
‘And you’ve then got the unknown consequences of missing the deadline.’
Bosses have said there will be no dividend until the spin-off is completed. It leaves them facing a furious backlash from shareholders at next week’s annual general meeting.
Trouble was already expected, with markets braced for a £1bn loss in quarterly results today.
The Mail understands directors felt there was no option but to tell markets of the deadline issue, but they have not given up hope of hitting the target date.
Experts said the worst-case scenario might see RBS lose control of the spin-off and sale, potentially forcing it to dispose of Williams & Glyn at a rock-bottom price. RBS shares closed down 2.9pc, or 7.3p at 244.8p.