Royal Bank of Scotland eyes sale process for Williams & Glyn

Royal Bank of Scotland — the parent of Ulster Bank — will sound out potential buyers for Williams & Glyn after receiving a number of approaches while continuing preparations for an initial public offering of the consumer bank.

The lender will target a “binding agreement” to sell Williams & Glyn by the end of 2016 with full divestment the following year, the Edinburgh-based bank said yesterday.

British and European banks have signalled interest in the consumer-lending unit that could be valued at about £1.5bn (€1.36bn).

The sale of RBS, which was bailed out by the UK government during the crisis, and the disposal of its units will be closely watched here by the Government as it prepares the ground for the IPO of AIB next year.

Britain’s biggest government-owned lender must spin off Williams & Glyn, which has about 300 branches in the UK, by the end of 2017 to meet EU state-aid rules related to its £45.5bn bailout at the height of the financial crisis.

A sale would follow the disposal of TSB Banking, a former unit of Lloyds Banking Group spun off to comply with EU rules, to Spain’s Banco de Sabadell for £1.7bn.

“A trade sale would be preferable as they can get it off their books more quickly,” said Sandy Chen, an analyst at Cenkos Securities.

“They might get a better price for it and could draw interest from European banks looking at the prospects in their own country versus the UK, thinking the grass is looking greener here,” he said.

Potential bidders include Spain’s Banco Santander and billionaire Richard Branson’s Virgin Money Holdings, Sky News reported yesterday.

RBS shares rose 1% yesterday in London at one stage.

The shares have however dropped about 26% this year, making them the second-worst performer among Britain’s five biggest banks.

RBS has faced several delays in disposing of Williams & Glyn, which has some 1.8m customers and had deposits of £24bn at the end of the third quarter.

The bank planned to sell the unit to Santander, in a deal which collapsed in October 2012, with the Spanish bank citing completion delays.

The lender said yesterday it plans to separate the Williams & Glyn business from the rest of RBS in the first quarter of 2017, which “remains compatible” with the EU-imposed divestment deadline.

RBS had previously said at its third- quarter earnings in October that it planned to start the business as a standalone unit in the summer of 2016.

“Separating out the Williams & Glyn business is a complex process,” RBS chief executive Ross McEwan said in the statement.

“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.”

Bloomberg and ‘Irish Examiner’ staff.