RBS' Williams & Glyn trade sale (or IPO) to kick-start next year

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Santander UK or Virgin Money could be planning to buy the Williams & Glyn business from Royal Bank of Scotland (RBS) after the taxpayer backed bank said it would begin the sale process in the first half of next year.

There has been no formal offer made for Williams & Glyn by either UK challenger, which will have around 300 branches in the UK once it’s split from RBS.

A Santander group spokesman said: "As our executive Chairman said at the recent Santander Investor day, we will continue to analyse opportunities in our core 10 markets where they add value and benefit to our customers and shareholders.”

If Santander UK does purchase the 307 branches from RBS it would mean the Spanish challenger would be catapulted into the top three largest banks in the UK in terms of branches.

Meanwhile, the other possible suitor Virgin Money said: “We have consistently said we will look at acquisition opportunities which are a good fit with the business which come with an appropriate risk profile and at a reasonable price.”

The deal would be huge for Virgin Money and would be expected to have to raise cash through selling shares to fund the deal.

Virgin Money currently runs just over 70 branches in the UK, while Santander has around 850.

Williams & Glyn, potentially valued at up to £2bn, is still being readied for an IPO, but a trade sale process was also being launched in the first half of next year, owing to its "strategic attractiveness".

HM Treasury has asked the Competition and Markets Authority (CMA) to suspend its review of the business in light of a potential sale, saying the decision to sell it would "be likely to raise different issues from an IPO, depending on the identity of the buyer".

The possibility of Santander UK and Virgin Money buying the Williams & Glyn business was first reported by Sky News.

Williams & Glyn, which has 307 branches, 1.8m customers and customer deposits of £24bn alongside net loans and advances of £20bn, still does not have a banking licence, however. RBS applied for one in September and is now "working with the PRA and FCA towards obtaining the licence and separating the business from RBS".

RBS chief executive Ross McEwan said: "Separating out the Williams & Glyn business is a complex process, but we remain focused on meeting our state aid obligation, achieving full divestment by the end of 2017, and reaching the best outcome for shareholders, customers, and staff."