RBS offshoot disposal to be investigated

ROYAL Bank of Scotland may have to boost the scale of the Williams & Glyn business it is to sell next year after the Treasury yesterday asked for a regulatory review of its likely impact on banking sector competition.

Williams & Glyn: RBS offshoot. Picture: TSPL

The Competition and Markets Authority (CMA) is already probing competition in UK banking, but its review into the demerged bank will be separate and its findings will be reported in July.

RBS must sell the business, which has 307 branches, as a condition imposed by the European Union for having received £45 billion of taxpayer funding during the financial crash of 2008. Industry sources said yesterday that, although the CMA has no powers to order changes, the Treasury could ask RBS – 80 per cent owned by the government and headed by Ross McEwan – to add more branches or make Williams & Glyn a stronger “challenger bank”.

The Prudential Regulation Authority, responsible for the financial strength of individual banks and insurers, will separately assess whether Williams & Glyn has a business model that is viable and sustainable, the Treasury said.

The government has said it wants the new spun-off bank to boost UK banking competition, particularly in the small business market.