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Williams & Glyn: RBS abandons spin-off IPO plan

To comply with European Commission State Aid requirements, RBS agreed in 2009 to a series of restructuring measures that were to be implemented over a four year period. One of these measures was the divestment of the RBS branch network in England and Wales and the NatWest branches in Scotland. This 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. This in turn led to the confirmed plan of establishing the Williams & Glyn brand as a standalone bank that could then be spun off via a flotation. The move has however encountered numerous issues, throwing the plan into doubt at regular intervals.

On August 5th 2016, RBS announced a £2bn ($3bn) loss for H1 2016 in what is an increasingly long list of losses for what was once, by some measures, the world’s largest bank. It represents a significantly worse performance than the same period a year earlier and has thrown the planned spin-off and IPO of the Williams & Glyn brand out of the window. RBS has been working hard to set up the separate bank in anticipation of an IPO but CEO Ross McEwan has now stated that this plan has been abandoned and that a sale will be pursued instead as the bank looks to satisfy EC rulings with regards to state aid.

With the IPO plan officially abandoned, RBS is now officially pursuing a sale and the smart money is on Santander boosting its UK presence with rumors it has already bid rife.

Santander has long felt that its share of the UK SME market is far lower than its natural market share and has consequently stated that one of its goals is to increase its presence in this space. The spin-off bank offers a strategically important opportunity to do so due to its strong position in the UK SME market and Santander is certainly serious about pursuing it.