Banco Santander makes a bid for Royal Bank of Scotland’s Williams & Glyn

Banco Santander has made an offer to take over Royal Bank of Scotland’s Williams & Glyn business, according to sources, as part of a long-standing plan to grow its market share in Britain.

The move by Spain’s largest bank could end a costly seven-year process by RBS to offload the small business lender, a key EU condition of its taxpayer-funded rescue at the peak of the global financial crisis.

RBS has blamed the complexities of creating a standalone technology platform for the delays in selling Williams & Glyn, seen by some analysts as a major milestone in the lender’s road to recovery, return to full private ownership and restoration of dividends.

Some 6,000 RBS employees have been working on the project to spin-off the 300 branches, equivalent to 1-in-10 of its UK staff. The process has been described by chief executive Ross McEwan as the most complex restructuring in global banking.

RBS, which reports results for the first half of its financial year on Friday, declined to comment on the matter yesterday.

In a statement, Santander UK, the British arm of the Spanish bank, said it did not comment on market rumours or speculation. It also said it continued to focus on organic growth but could look at opportunities that benefited its customers and shareholders.

Santander, which already controls former UK building societies Abbey and Alliance & Leicester, is keen to expand in Britain to offset weakness in its domestic market, where high rates of unemployment and weak economic prospects have led to a rise in bad loans and volatile credit demand.

Santander is working on a deal where the unit’s loans, deposits, customers and branches would transfer, while some services would continue to be hosted by RBS, one source told Reuters. A fully agreed deal is unlikely in the coming days, the source added.

Spanish rival Banco Sabadell acquired TSB from Lloyds Banking Group in a £1.7bn deal in March last year, in a similar effort to diversify revenues.

Santander walked away from a deal to buy Williams & Glyn fours years ago amid concerns about its technology platform.

Virgin Money, and Spain’s BBVA have also been linked with bids. Williams & Glyn has 1.8 million customers, net loans and advances of £20bn and customer deposits of £24bn, making it one of Britain’s largest prospective ‘challenger’ bank brands with potential to poach market share in the small business lending sector.


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