Rivals call for RBS to sell off £20bn of loans

ROYAL Bank of Scotland should be forced to sell off £20billion of loans to rivals at a discount price to increase competition in the market, according to challenger banks.

They have written to Brussels competition officials to lay out their concerns about moves to allow RBS to ditch its sale of Williams & Glyn.

That sell-off, which would have included the current accounts and loans issued to thousands of businesses, had been ordered by Brussels following RBS’s bail-out.

The bank has found the sale too difficult to achieve and is seeking an alternative solution to address EU concerns.

RBS now wants to transfer business current accounts to rivals as part of a £750 million package of measures.

But challenger banks say they do not want the current accounts because they are not profitable. Instead they want the loans, which deliver interest payments.

One challenger bank boss said: ‘Bank accounts on their own are loss-making because accessing the payment system is so expensive.’

There are also new rules coming in which mean challenger banks would have to set aside more capital to absorb potential losses if they have more than 40,000 business current accounts.

RBS ‘should be obliged to sell off portfolios of loans,’ the source added.

The proposed sale of Williams & Glyn envisaged it holding £24billion in deposits from customers – and having £20billion out on loan.

But RBS, which has a balance sheet worth £800billion, could not find a buyer for Williams & Glyn and spent £2billion trying to separate it.

The European Commission said last month that it would ask rivals what they thought of RBS’s latest plan, put together in conjunction with the Treasury, which still owns a 71.5 per cent stake in the bank. The deadline for responses is June 5.

An RBS spokesman said: ‘We believe the proposed package of measures would provide increased competition in the SME marketplace, and enable us to deliver a solution on our remaining EC State Aid obligation more quickly and with more certainty.

‘We also note the Commission’s preliminary conclusion that this package appears able to deliver an equivalent outcome to the original State Aid divestment obligation.

‘We now await the conclusion of the consultation and a formal decision by the EC.’