RBS Says It May Miss Williams & Glyn Sale Deadline -- Update
29 April 2016 - 12:57AM
Dow Jones News
By Max Colchester
LONDON--Royal Bank of Scotland Group PLC said Thursday it may
struggle to meet a regulatory deadline to split off several hundred
bank branches, a major blow to the bank's restructuring plans.
Following its 2008 government bailout, RBS is required under
European Union state aid rules to spin off 314 branches. These have
been regrouped under the brand Williams & Glyn and need to be
disposed of by the end of 2017.
RBS, which is 73% owned by the British government, said there is
now "a significant risk" that it won't be able to sell the branches
by that deadline. The bank also warned that the cost of separating
the unit was likely to be greater than previously estimated. "RBS
is exploring alternative means to achieve separation and
divestment," the bank said in a statement.
If the bank doesn't meet the 2017 EU deadline, an independent
trustee could be appointed to complete the disposal at a
rock-bottom price. Additional business restrictions could also be
heaped on the beleaguered bank. RBS shares dropped 4% on the
news.
RBS had forecast that the project would cost about GBP1.6
billion ($2.32 billion) to break out Williams & Glyn. The
lender had initially planned to launch an initial public offering
of the unit, but after receiving "a number of informal approaches
for the business," it planned to explore a sale to a competitor in
the first half of 2016, which it hoped could be done by the end of
2017. Now this looks unlikely, in part due to the technical
challenges of creating a new computer system for the new bank.
"The delays could call into question management execution of
RBS's restructuring process," Jefferies analysts said in a
note.
The process of splitting off the unit has haunted the bank for
eight years. Originally the bank was supposed to break out Williams
& Glyn by 2013 but this was delayed after Santander UK pulled
out of a proposed deal to buy the branches. RBS is due to report
its first-quarter earnings on Friday.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
April 28, 2016 10:42 ET (14:42 GMT)
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