Williams & Glyn boss and other top dogs quit RBS after plans ditched to spin it off as a separate challenger bank

 
Hayley Kirton
Follow Hayley
RBS Announces A £1.1 Billion Half Year Profit
The bank was told to divest of Williams & Glyn as part of its state bailout deal (Source: Getty)

The boss of Williams & Glyn, along with a quartet of other top dogs, is due to leave Royal Bank of Scotland, after the lender shelved plans to separate the challenger bank.

Taxpayer-backed RBS was told to divest of Williams & Glyn 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 a slew of problems while trying to do so. In February, it was announced alternative arrangements had been 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 challenger banks in their efforts.

Read more: RBS offers to sweeten the deal for shareholder action group

Now, Sky News has reported that RBS has sent round an internal memo announcing the departure of several top Williams & Glyn staff, including the division's chief exec Jim Brown.

Others leaving include Williams & Glyn's chief financial officer Leigh Bartlett, chief operating officer Chris Davies and chief risk officer Rick Hunkin.

Paul Fox, currently managing director of retail and business banking at Williams & Glyn, will take over from Brown when he leaves next month, and the business will continue to be run as a separate franchise for the time being.

Read more: RBS to close 158 branches and put 472 jobs on the line

"Jim Brown and the senior team that supported him were brought in to create a standalone challenger bank," an RBS spokesperson said. "As this is no longer happening, Jim and some members of the existing executive team will be leaving the bank at the end of May."

RBS made a considerable effort to divest of Williams & Glyn, at certain points considering an IPO for the division or a sale to either Santander or Cyldesdale & Yorkshire Banking Group.

The alternative proposals are likely to cost the bank around £750m in the first instance, but will probably also lead to a reduction of earnings going forward.

Read more: Exclusive: How much the City watchdog spent on its RBS small biz report

The announcement of Brown's departure comes a day after the European Commission revealed it would be launching a probe into the alternative plans, particularly focusing on whether the measures proposed would adequately boost competition in the UK's small business banking market.

The UK's Treasury has also said it will run its own session of evidence gathering, and is now seeking feedback from the likes of challenger banks and fintech firms.

RBS announced in February it was in the red for the ninth year in a row, revealing a £7bn loss for 2016.

Related articles