The government has announced RBS may not have to sell its 307 Williams & Glyn branches, with the bailed-out bank instead being forced to spend £750m on a competition-boosting fund for challenger banks.
Europe’s commissioner for competition policy will start the process of finding an alternative to a sale, which could see a removal of the EU deadline of 31 December 2017 for RBS to offload the business.
Ross McEwan, chief executive of RBS, said: “If agreed [the new plan] would deliver an outcome on our EC state aid divestment obligations more quickly and with more certainty than undertaking a difficult and complex sale and would provide much needed certainty for customers and staff.”
The bank said a £750m provision for the fund would be included in its annual results, due next Friday, although the bank said it could also face additional reintegration costs.
The new fund would be independently administered, with so-called “dowries” paid to small businesses switching to challenger banks. Other large banks, including HSBC, Lloyds and Barclays, will not be eligible for the fund.
RBS will also be forced to give business customers of the challenger banks access to its branch network, as well as funding a new fintech investment fund.
Along with the 307 branches, Williams & Glyn had £20.8bn of loans to businesses on its balance sheet at the end of its third quarter.
The bank had agreed to the sale as part of EU regulations on state aid in 2009, with an updated framework in 2014.
However, the sale has proven problematic. IT issues were blamed for preventing a deal with Santander in 2012, while the same factor was identified in the abandonment of a planned flotation.
The Treasury said the sale had failed owing to “external factors”.
RBS agreed to sell off five subsidiaries when the bank was bailed out by the government to the tune of £45bn starting in 2008.
A Treasury spokesperson said: “RBS must deliver on its remaining state aid commitments and this new plan represents the most effective way of delivering the pro-competition objectives behind them.”
“This new plan provides a clear blueprint to increase competition in the UK’s business banking market, and would help RBS resolve one of its most significant legacy issues which has held back the sale of the taxpayers’ stake.”