Santander Eyes RBS Unit -- Update
August 02 2016 - 12:04PM
Dow Jones News
By Max Colchester
Santander UK has made an offer to acquire Royal Bank of Scotland
Group PLC's Williams & Glyn unit, pouncing as the British bank
struggles to unload the retail business ahead of a 2017 deadline,
according to people familiar with the matter.
Following its 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 next year.
The exact details of the deal remain unclear, and people close
to the process warned that the sale could still fall apart.
For Banco Santander SA's U.K. unit, Williams & Glyn could
help bolster its presence in corporate lending to small British
businesses. For RBS it could solve an expensive problem: how to
carve out a new bank from its existing operations.
The Williams & Glyn separation has been dogged with
technology problems and delays. RBS, which is 73% owned by the
British government, said earlier this year that there was "a
significant risk" it couldn't spin off the branches by that
deadline, making an initial public offering of William & Glyn
look unlikely.
RBS has since been exploring other ways of shedding the
branches. These include going down the route Lloyds Banking Group
PLC chose when it also had to meet similar EU requirements. Lloyds
created a new bank, TSB, but didn't move all its computer systems
onto a new platform. Many of TSB's operations use Lloyds's
technology. The Santander deal could be structured in a similar
way.
However, RBS has been here before. A plan to sell the branches
to Santander in 2012 fell through, amid concerns about the bank's
technology. Today RBS has 5,000 staff working on the process of
separating the bank. Williams & Glyn still doesn't have its own
banking license.
Santander has been circling the unit for some time. Bankers say
that a slew of smaller challenger U.K. banks could merge as they
seek to weather the fallout from Brexit and boost market share.
Santander UK isn't the only finance company looking at the Williams
& Glyn unit, according to one person familiar with the
matter.
Write to Max Colchester at max.colchester@wsj.com
(END) Dow Jones Newswires
August 02, 2016 11:49 ET (15:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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