European Commission probes UK plan to avoid RBS Williams & Glyn sell-off
The European Commission has launched an in-depth probe into Government proposals which aim to spare Royal Bank of Scotland (RBS) from being forced to sell off Williams & Glyn.
As a condition of the bank's bailout at the height of the financial crisis, the EU rubber- stamped a restructuring plan whereby RBS agreed to sell its Williams & Glyn branch network by the end of 2017 to remedy competition concerns.
However, the lender has struggled to offload the branches, and in February the Treasury and RBS proposed scrapping the sale in favour of an alternative £750 million plan to boost competition in the banking market in an attempt to appease officials in Brussels.
On Tuesday, Competition Commissioner Margrethe Vestager said: "RBS is the leading bank in the UK SME banking market and received significant state support during the financial crisis.
"The Commission is now seeking the views of all interested parties on an alternative package proposed by the UK to replace RBS's commitment to divest Williams & Glyn.
"We can only accept this proposal if it has the same positive effect on competition as the divestment of Williams & Glyn would have had. This is important for fair competition."
The antitrust watchdog added that it will "carefully review" the responses before taking a final decision on whether or not to accept the alternative plan.
For its part, the Treasury is to begin a market testing exercise to ensure that the new package does in fact increase competition.
A Treasury spokesman said: "This is an important step forward in the process of resolving one of RBS' most significant legacy issues.
"We look forward to working with relevant parties to ensure the proposed plan delivers increased competition in the UK's business banking market as effectively as possible."
Chancellor Philip Hammond has already said the Government does not expect to offload its 72% stake in RBS until after 2020.