Here's what is holding back RBS' 'challenger bank' spin-off
RBS says it's made "significant" progress but there's still a big issue holding back the sale - Williams & Glyn doesn't have a banking licence.
We submitted the banking licence application for Williams & Glyn on 30 September 2015 and are now working with the PRA and FCA towards obtaining the licence and separating the business from RBS. We are now planning to separate the business from RBS in Q1 2017 which remains compatible with the end 2017 divestment deadline.
Royal Bank of Scotland also revealed that it's changing strategy with Williams & Glyn and is now pursuing plans to sell the bank to another bank or financial institution alongside looking at floating it on the stock market, as originally planned.
RBS says:
The strategic attractiveness of Williams & Glyn has been reflected in a number of informal approaches for the business. Therefore whilst continuing preparations for an IPO, we are planning to launch a trade sale process in H1 2016, and targeting the signing of a binding agreement to sell the business by year end 2016, with full divestment by the end of 2017.
Around seven years ago, RBS had to beg the government for a bailout. Over 2008 and 2009 it borrowed £45.4 billion ($70.1 billion), worth 500p per share, from the taxpayer and it has yet to pay it back. The government still owns 81% of RBS.
Under the terms of its deal with the EU, RBS has to hive off W&G, just like Lloyds did with the sale of retail unit TSB.
RBS CEO Ross McEwan in a statement sent to Business Insider: "Separating out the Williams & Glyn business is a complex process, but we remain focused on meeting our State Aid obligation, achieving full divestment by the end of 2017, and reaching the best outcome for shareholders, customers, and staff."
McEwan has focused the bank on the High Street rather than the complex high finance that got the bank into trouble. As part of that he plans to slim down RBS international presence from 51 to just 13 countries. McEwan took
McEwan took over from Stephen Hester in October 2013, the same year RBS announced it would spin off its W&G division. Market commentators remarked at the time that the move wasn't a positive one.
Williams & Glyn has s 1.8 million customers. Once it is ready to be sold off, W&G will be made up of 300 RBS branches in England and Wales and a handful of NatWest branches in Scotland in total.
RBS said today that W&G had net loans and advances to customers of £20 billion and customer deposits of £24 billion as at end of the third quarter this year.