World Economy

RBS Under Pressure, Struggling to Sell 300 Branches

RBS Under Pressure, Struggling to Sell 300 BranchesRBS Under Pressure, Struggling to Sell 300 Branches

Struggling lender Royal Bank of Scotland is facing a fresh challenge in its long-running effort to sell 300 branches ahead of a European Union deadline.

The bank failed to attract any bidders for the whole operation, which it was ordered to sell as a condition of its £46 billion ($56.98 billion) state bailout at the height of the financial crisis, This Is Money reported.

Instead, it is now hoping to sell a smaller part of the operation amid fears it could become a political football as Britain quits the EU. Bosses have been desperately seeking to ditch the operation, which comprises 314 branches, for years.

RBS initially tried spinning it off as a new bank called Williams & Glyn. But this proved far more costly and complicated than expected, with bills reaching £50 million a month, and RBS abandoned its efforts earlier this year.

It is now instead trying to secure a trade sale for the branch network and the 1.8 million customers it serves.

There have been approaches from smaller rivals Clydesdale and Santander, but neither wants to take on the least profitable parts of the operation. The key hang-up is thought to be the unit’s six Scottish branches, which would likely act as a drag on profits.

Clydesdale has also asked for business customers with more than £2 million of turnover to be removed from the deal because it is harder to transfer them.

City speculation suggests that Clydesdale–which has officially announced its interest–is likely to hold off until the last moment and come in with a low offer as this will be very difficult to refuse.

Williams & Glyn is thought to be worth around £1.3 billion but banking sources believe RBS might only fetch around half that amount.

The EU has said the network must be sold by the end of next year, a deadline RBS is not expecting to meet. Brussels could then step in and oversee the process itself–possibly leading to a fire sale.

One senior banker said he feared the issue would become bogged down in politics. Taxpayers still own 72% of RBS and will ultimately be on the hook for any costs if it fails to sell the branches in time.

And with vengeful European bureaucrats looking to punish the UK for daring to vote for Brexit, there are fears this could be used as leverage.


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