MarketLine Blog

Williams & Glyn: Future of RBS spin-off in doubt as launch delayed

Overly ambitious growth strategies initially brought great success for RBS and the company was seen as the darling of the stock market, consistently delivering double digit growth. However, the company swelled to such a size that its assets were twice the size of the UK economy and a woefully ill-advised acquisition of ABN Amro in 2007 as part of a consortium tipped the bank over the edge as it took ownership of a large amount of toxic assets. The weakness was ruthlessly exposed during the global crash of 2008/2009 and the UK government had to bail out the Edinburgh-based banking giant to the tune of £45bn ($68.8bn). As a result of this, the European Commission (EC) ruled that the bank had received state aid and so mandated a divestment of some of RBS’s assets.

The divestment of the RBS branch network in England and Wales and the NatWest branches in Scotland was scheduled to be completed by 2013, but an extension was granted after the original bidder, Santander, pulled out. A consortium known as Corsair stepped into the breach and invested, facilitating a later sale or, more likely, an IPO. However, the process of launching the new Williams & Glyn brand has been beset with issues and delays have been numerous. In June 2016, it was announced that the bank was postponing a marketing push until the first quarter of 2017, leading to speculation that the brand may never see the light of day and may be swallowed up instead by a bank with an existing brand on the UK high street.

The divestment process should have been, and needed to be, slicker and much quicker and will end up costing RBS. Their loss may, however, be another bank’s gain and it would certainly not be surprising if Santander’s rumored renewed interest results in the Spanish bank ultimately being the acquirer of over 300 branches at least five years after that very scenario should have originally come to pass.

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