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Bank looking to offload branches

RBS ‘close to deal’ with Santander on Williams & Glyn

RBS hqRoyal Bank of Scotland looks to be close to a deal with Santander UK to offload the branch network that was scheduled to become a new “challenger”bank.

An agreement would confirm speculation a few weeks ago that the two were in talks.

Spain-owned Santander UK is likely to take on the 315 branches that RBS was ordered to sell by the European Commission as a condition of receiving state aid in 2009. Almost all of them are NatWest branches in England.

RBS planned to carve out a new bank with 2 million customers and £24 billion of assets. It intended to revive the Williams & Glyn brand for the new bank, and it was unclear whether Santander would trade the business under this name.

W&G would have ranked as the UK’s seventh largest bank with a 2% share of the personal current account market and 5% of SMEs, amounting to 113,000 commercial customers. This latter group are thought to be Santander’s main focus as it builds a presence in the business banking sector.

Santander is the fifth-largest bank in Britain and had been preferred bidder for the branches in 2012, only to pull out over IT issues.

Similar issues are still behind RBS’s attempts to split off the business, but Santander now only wants the assets, customers and branches. RBS will be left with an IT platform which has absorbed more than £1.2 billion of investment and thousands of man hours.

RBS chief executive Ross McEwan, who last year insisted the bank was on course to meet its deadline of floating W&G by the end of 2017, was forced to admit earlier this year that the project had hit problems and that a trade sale was a possible alternative solution.

In a statement in April the bank said “there is a significant risk that the separation and divestment to which we are committed will not be achieved by 31st December 2017”.

RBS is expected to update the market on the project alongside half-year losses on Friday.

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