If adopted, this alternative plan would replace the existing requirement to achieve separation and divestment by 31 December 2017 of the business previously described as Williams & Glyn. As previously disclosed, none of the proposals to acquire the business received by RBS can deliver a full separation and divestment before the 31 December 2017 deadline.
RBS has agreed that HMT will now seek formal amendment to RBS’s State Aid commitments to pave the way for the Commissioner to propose to open proceedings, as described above. In addition to the Commission’s proceedings, HMT will carry out a market testing exercise in parallel. The opening of the Commission’s proceedings does not prejudge the outcome of the investigation.
The plan envisages that RBS will deliver the following revised package of remedies to promote competition in the market for banking services to small and medium enterprises (“SMEs”) in the UK:
- A fund, administered by an independent body, that eligible challenger banks can access to increase their business banking capabilities;
- Funding for eligible challenger banks to help them incentivise SMEs to switch their accounts from RBS paid in the form of “dowries” to challenger banks;
- RBS granting business customers of eligible challenger banks access to its branch network for cash and cheque handling, to support the measures above; and
- An independent fund to invest in fintech to support the business banking of the future.
Ross McEwan, RBS CEO, said “Today’s proposal would provide a path to increased competition in the SME market place. If agreed it 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.”
RBS has taken a £750 million provision within its 2016 Annual Results as a consequence of today’s proposal. This represents our best estimate of the cost of the above package of remedies at this juncture.
Our Q3 2016 Financial Supplement disclosed a breakdown of Williams & Glyn's income and customer loans and advances between Retail and Commercial as set out in the table below.
Subject to the plan becoming finalised and further discussions with the EC and HMT we will assess the timing and manner in which we reincorporate the business into the RBS franchises. This reintegration would likely create some additional restructuring charges during 2017 and 2018.
RBS will be publishing its 2016 Annual Results on 24 February 2017.
Our Q3 2016 Financial Supplement disclosed a breakdown of Williams & Glyn's income and customer loans and advances between Retail and Commercial as set out in the table below: