28th Apr 2016 13:13
LONDON (Alliance News) - Royal Bank of Scotland Group PLC on Thursday warned there's significant risk of missing a deadline to separate and sell the UK retail branch network known as Williams & Glyn, one of the obstacles that must be overcome before the state-backed bank can return capital to shareholders.
The overall financial hit from the process will probably be "significantly greater" than previously estimated, RBS said in a statement.
"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. RBS is exploring alternative means to achieve separation and divestment," the bank said.
The update followed "further extensive analysis" on the separation and divestment of Williams & Glyn, RBS said. Separation costs relating to Williams & Glyn, a network of 300 branches, amounted to GBP630 million in 2015, according to RBS's annual report for that year.
RBS has until the end of 2017 to separate and divest Williams & Glyn, a deadline put in place by the European Commission as part of the bank's GBP45.5 billion bailout in the financial crisis of 2008-09. The UK government still owns roughly 73% of RBS.
In its annual report for 2015, RBS warned that the challenges relating to the separation of Williams & Glyn were one obstacle to resuming capital distributions to shareholders.
Shares in RBS were down 3.6% at 243.20 pence on Thursday afternoon. The bank will report first-quarter results on Friday.
By Samuel Agini; [email protected]; @samuelagini
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