Watchdog probes RBS sale of challenger bank Williams & Glyn

By  The Telegraph

6:37PM BST 28 May 2015

Competition and Markets Authority to review bank’s spin-off at request of Treasury

Logo of the RBS, Royal Bank of Scotland in London, England

RBS is selling off Williams & Glyn next year

Royal Bank of Scotland may be forced to bolster Williams & Glyn (W&G), the challenger bank it is selling off, after George Osborne ordered the competition regulator to investigate how robust the new bank will be.

The Competition and Markets Authority (CMA) said on Thursday that the Treasury had asked it to “advise on the competition implications” of RBS selling the bank, which will begin next year.

RBS is being forced to create W&G out of 307 branches, under the orders of the European Commission following a £45bn bail-out in 2008.

The new bank, which will have around 1.4m retail customers and 200,000 small businesses, is due to launch on Britain’s high streets next year, and will be floated in the final quarter of 2016.

The CMA does not have the power to force conditions on RBS in this instance but if it has any concerns, it will advise the Government, which could pressure the bank to make changes. The Treasury still owns 80pc of RBS, six-and-a-half years after it was bailed out.

Two years ago, the Office of Fair Trading, which handled some competition matters before the CMA, was asked to look into the disposal as well as Lloyds’ spin-off of TSB, which was ordered by the European Commission for similar state aid reasons.

The OFT proposed conditions for TSB’s sale

At the time, the OFT said it did not have any concerns about W&G’s ability to survive and compete on a standalone basis, while it did raise issues with the Lloyds sale.

Ultimately, Lloyds’ sale of TSB included agreements, such as a break clause on IT payments, that were proposed by the OFT, although it is unclear if these were included at the Treasury’s request.

The CMA is also carrying out a wider investigation into current accounts and small business banking, but said the RBS review would not interfere with this. It expects to report back in July.

RBS, which has 5,000 staff working on the carve-out, said: We are working hard and devoting significant resources to establishing Williams & Glyn as a viable, stand-alone bank that will bring increased competition to the retail market.

“We continue to focus on achieving the best possible outcome for customers, with an IPO planned for Q4 2016.”

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