The European Commission formally announced today it will be picking over the alternative plan to Royal Bank of Scotland selling Williams & Glyn.
The bank, which is still 73 per cent owned by the taxpayer, was told to divest of its Williams & Glyn division by the end of 2017 as part of its £45.5bn state bailout deal at the height of the financial crisis.
However, the lender ran into numerous problems attempting to do so. In February, it was announced alternative arrangements were being drawn up to allow RBS to keep Williams & Glyn, provided it complied with other initiatives to boost competition in small business banking, such as setting up a fund to support other smaller lenders' endeavours.
"The commission is now seeking the views of all interested parties on an alternative package proposed by the UK to replace RBS's commitment to divest Williams & Glyn," said Margrethe Vestager, the EU's competition commissioner, today.
"We can only accept this proposal, if it has the same positive effect on competition as the divestment of Williams & Glyn would have had. This is important for fair competition."
The UK Treasury also announced today it would be running its own separate investigation into the likely effect of the alternative plans, and is seeking input for four weeks starting from 17 April. It has said it is particularly keen to hear from challenger banks, small business representatives, venture capital firms and fintech companies.
"This is an important step forward in the process of resolving one of RBS' most significant legacy issues," a Treasury spokesperson said. "We look forward to working with relevant parties to ensure the proposed plan delivers increased competition in the UK's business banking market as effectively as possible."
The alternative proposals will cost RBS in the region of £750m initially but they are also likely to lead to a reduction in the bank's earnings going forward.
RBS announced in February it was in the red for the ninth year on the trot, revealing a £7bn loss for 2016. Chief executive Ross McEwan has already said he thinks 2017 is unlikely to be the year the bank returns to profit, but feels 2018 will be.
Shares in RBS are trading down 1.6 per cent at 236p at time of writing.