Banco Santander SA formally offered to buy Royal Bank of Scotland Group Plc’s Williams & Glyn consumer bank this week, marking the second time the Spanish lender has tried to acquire the business, according to two people familiar with the matter.
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If Santander goes through with the deal it would conclude a protracted process for RBS, which was ordered to offload the business in 2008 by the European Commission in return for a £45.5 billion taxpayer bailout during the financial crisis.
Shares in RBS spiked on the news, but are down 1.3 per cent today. However, the bank warned in April that it might not make this deadline.
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 said. The deal is also unlikely to be formalised by the end of the week.
The vote to leave the European Union is not expected to affect the decision to offload the business as the deadline for its completion arrives before the United Kingdom will have exited the EU even if the mechanism to leave (Article 50) is triggered imminently.
RBS is expected to provide an update on its plans for W&G alongside its half-year results on Friday, with the City keen for news on a disposal that the state-backed bank’s chief executive has described as the world’s most complex banking IT project.
The likelihood of a prolonged low interest rate environment could compound that view.
RBS says that “due to the complexities of Williams & Glyn’s customer and product mix, the programme to create a cloned banking platform continues to be very challenging and the timetable to achieve separation is uncertain”.
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It also said it continued to focus on organic growth but could look at opportunities that benefited its customers and shareholders. The bank won’t “comment on rumors or market speculation” about any potential approach for Williams & Glyn, he said.
