RBS Royal Bank of Scotland Group PLC

By Margot Patrick 

LONDON -- Royal Bank of Scotland Group PLC said Friday it could abandon a troublesome sale of bank branches it agreed to in the financial crisis.

Under a U.K. government plan, the bank said it would instead spend GBP750 million ($936 million) finding ways to move small-business customers off its books and promote more competition. RBS will take the charge in its 2016 results, to be released Feb. 24. The plan still needs to be studied by the European Commission, which is in charge of making sure state aid complies with European Union rules.

Selling 300 branches in England and Wales was a condition from the Commission for RBS's GBP46 billion government bailout in 2008. RBS dug out an old banking name, Williams & Glyn, to rebrand the branches, but it proved to be a herculean task to separate them from RBS's technology systems. Deadlines for the sale came and went and RBS has spent more than GBP1.5 billion on the carve out.

Meanwhile, it added to other problems at RBS that have delayed the government shedding its 70% stake.

The U.K. has taken separate measures to encourage more competition in the country's banking, for business and retail customers. RBS and four other large banks control the bulk of the U.K.'s checking accounts, mortgages and small-business loans.

The government measures proposed Friday would see RBS set up a fund for smaller banks to add to their business banking, and could involve it paying "dowries" to challenger banks to lure small-business owners to their platforms.

RBS said the government's plan would be quicker and more certain than "a difficult and complex sale."

--Max Colchester contributed to this article.

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

February 17, 2017 16:19 ET (21:19 GMT)

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