RBS plans trade sale for Williams & Glyn spin-off

Royal Bank of Scotland today said it plans to launch a trade sale for its Williams & Glyn subsidiary following a number of approaches.

RBS chief executive Ross McEwan. Picture: Phil Wilkinson

Although the state-backed lender said it continues to prepare for an initial public offering (IPO) of the 300-branch business, it is targeting the signing of a binding agreement to sell the division by the end of next year, with full divestment by the end of 2017.

“The strategic attractiveness of Williams & Glyn has been reflected in a number of informal approaches for the business,” RBS said.

The Edinburgh-based lender has to sell Williams & Glyn by the end of 2017 as a condition of its state bailout, and in 2013 agreed a £600 million investment in the firm under a deal with a consortium of investors led by Corsair Capital and Centerbridge Partners.

At the end of the third quarter, Williams & Glyn had net loans and advances to customers of £20 billion and customer deposits of £24bn. RBS said it will release more financial information about the business with its full-year results, due on 26 February.

Chief executive Ross McEwan said: “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.”

Shore Capital analyst Gary Greenwood said a trade sale of Williams & Glyn would mark a “cleaner exit” from the business than an IPO.

“However, the financial impact of its disposal is unlikely to be material to overall group forecasts or valuation, in our view, although Williams & Glyn does remain an ongoing distraction for management,” he added.

“Note that the group is not expects to commence dividend payments until 2017 at the earliest, despite a much-improved capital position following the recent completion of the sale of Citizens Financial Group.”