Royal Bank of Scotland is likely to avoid the compulsory sale of its Williams & Glyn branches by doling out £835 million to help boost competition among its rivals.
It follows a joint review by the European Commission (EC) and HM Treasury, which have put forward the “alternative remedies package” that will help fulfil RBS’s state aid obligations following its government bailout at the height of the financial crisis.
The package includes plans for a £425m fund aimed at competitors across the UK’s banking and fintech sector, as well as a £350m pot meant to help challenger banks convince small and medium-sized businesses – which were previously Williams & Glyn customers – to switch accounts and loans from RBS.
RBS will shell out an another £60m to cover additional costs, which will help cover the proposal’s implementation.
The proposal, which still requires approval by the EC’s College of Commissioners, will save RBS from hiving off the near-300 Williams & Glyn branches, having struggled to find a buyer ahead of its deadline, which was set for the end of this year.
A decision by the College of Commissioners that could cement the terms of the proposal is expected in the second half of the year.
RBS chief executive Ross McEwan said: “We welcome the progress that HM Treasury and the EC Commissioner responsible for competition have made on agreeing an alternative package of remedies to increase competition in the SME marketplace.
“We await a formal decision on this proposal which would allow us to resolve our final state aid divestment obligation.”