PLANS to make the banking sector more competitive through the sale of Royal Bank of Scotland assets have been cast into doubt.
Spanish giant Santander now appears to be the only bank with the financial clout to provide the estimated £2bn to support the struggling bank’s loan book, which stands at £24bn.
The Treasury had hoped some new players, including Metro Bank and Virgin Money, would buy the assets to increase competition.
However, a £3bn aid package acquired by RBS through the Bank of England’s Special Liquidity Scheme is unlikely to be a hindrance to the sale. It was feared a new buyer would have to refinance this debt within weeks of a buy-out but a source told City A.M. it will be run-off before a sale takes place.
As part of the deal with the Bank of England, the £3bn will have to be privately refinanced or repaid by 2011. The source said the complexity of the asset sale means it is highly unlikely a deal will be struck before the deadline.