Photographer: Chris Ratcliffe/Bloomberg

RBS to Start Sale Process for Williams & Glyn on Approaches

  • Lender to seek `binding agreement' to sell unit by end-2016
  • RBS to continue planning for potential IPO of business

Royal Bank of Scotland Group Plc will sound out potential buyers for Williams & Glyn after receiving a number of approaches while continuing preparations for an initial public offering of the consumer bank.

The lender will target a “binding agreement” to sell Williams & Glyn by the end of 2016 with full divestment the following year, the Edinburgh-based bank said in a statement on Wednesday. British and European banks have signaled interest in the consumer-lending unit that could be valued at about 1.5 billion pounds ($2.3 billion), a person familiar with the matter said earlier this week.

Britain’s biggest government-owned lender must spin off Williams & Glyn, which has about 300 branches in the country, by the end of 2017 to meet European Union state-aid rules related to its 45.5 billion-pound bailout at the height of the financial crisis. A sale would follow the disposal of TSB Banking Group Plc, a former unit of Lloyds Banking Group Plc spun off to comply with EU rules, to Spain’s Banco de Sabadell SA for 1.7 billion pounds.

“A trade sale would be preferable as they can get it off their books more quickly,” said Sandy Chen, an analyst at Cenkos Securities Plc in London. “They might get a better price for it and could draw interest from European banks looking at the prospects in their own country versus the U.K., thinking the grass is looking greener here.”

Potential Bidders

Potential bidders include Spain’s Banco Santander SA and billionaire Richard Branson’s Virgin Money Holdings UK Plc, Sky News reported on Wednesday, without saying where it obtained the information.

RBS shares rose 1 percent to 291.60 pence at 12:32 p.m. in London. They have dropped about 26 percent this year, making them the second-worst performer among Britain’s five biggest banks.

RBS has faced several delays in disposing of Williams & Glyn, which has some 1.8 million customers and had deposits of 24 billion pounds at the end of the third quarter. The bank planned to sell the unit to Santander, in a deal which collapsed in October 2012, with the Spanish bank citing completion delays.

The lender said on Wednesday it plans to separate the Williams & Glyn business from the rest of RBS in the first quarter of 2017, which “remains compatible” with the EU-imposed divestment deadline. RBS had previously said at its third-quarter earnings in October that it planned to start the business as a standalone unit in the summer of 2016.

“Separating out the Williams & Glyn business is a complex process,” RBS Chief Executive Officer Ross McEwan said in the statement. “We remain focused on meeting our state aid obligation, achieving full divestment by the end of 2017, and reaching the best outcome for shareholders, customers, and staff.”

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