28th May 2015 07:10
LONDON (Alliance News) - The UK government Thursday said it has asked competition regulators to look at the implications on banking competition of the plans for Royal Bank of Scotland Group PLC to carve out lender Williams & Glyn.
The Competition and Markets Authority's work to assess the impact of the planned divestment on banking competition is meant to help the government and RBS to decide whether more could be done. The findings of the assessment will be reported in July, which will enable the government and RBS to consider their next actions.
"The divestment of Williams & Glyn represents an opportunity to improve competition in the small business banking sector, and today?s announcement is another step in the government?s long term plan to improve competition in banking, and create a banking sector that gives real choice to retail and small business customers and supports the wider economy," the UK government said in a statement.
The European Commission, which is the European Union's executive body, requires RBS to divest of Williams & Glyn by the end of 2017 as a condition of the aid given to the bank by the UK government during the financial crisis of 2007-09. Significantly, the government said the review "will not alter the current divestment timetable".
The UK government wants Williams & Glyn, which consists of 307 bank branches across England, Wales and Scotland, to become a "strong competitive challenger" to the main lenders on the high street, which is why the Competition and Markets Authority has been asked to look into the matter.
The Bank of England's Prudential Regulation Authority will assess whether Williams & Glyn has a "viable and sustainable" business model as part of broader work being conducted on whether to authorise the lender.
The UK government still owns about 80% of RBS after injecting it with GBP45 billion to prevent the bank from failing at the height of the financial crisis.
RBS shares were down 0.3% at 346.10 pence early Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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