News Column

Get on with branch spin-off, Cable tells RBS

July 18, 2014

Jill Treanor

The business secretary, Vince Cable, has told Royal Bank of Scotland to speed up the process of creating a new challenger bank for small business customers by spinning out 314 of its branches under a new brand.

With the banking industry today facing the prospect of a competition inquiry into small business banking, Cable called on RBS to accelerate the reintroduction of the Williams & Glyn name on the high street.

RBS is reviving the name, last used 30 years ago, for the 314 branches the EU ordered it to sell at the time of its 2008 taxpayer bailout, but it has yet to put the fascia above any of the branches in question.

Lloyds Banking Group resurrected the TSB name for the 631 branches it was forced to spin off and has started the process of a stock market flotation.

The attempt by RBS to sell off its branches has been delayed after Santander pulled out of a deal in 2012.

Cable's latest intervention, in a letter to the RBS boss, Ross McEwan, came ahead of an announcement due this morning from the Competition and Markets Authority on its review of the banking sector.

The competition watchdog has been looking at two areas - small business banking and personal current accounts - which are dominated by the big four banks, RBS, Lloyds, Barclays and HSBC.

A provisional decision to conduct a full-blown investigation is expected today with a final decision to be made in the autumn.

The revival of W&G aims to create more competition in the small and medium sized (SME) business sector, which Cable is keen to see.

In his letter the business secretary told McEwan that he wanted to see a clear timetable to create a standalone W&G and an ability to distinguish the branches on the high street.

"I believe there is a case for greater clarity about the path to divestment. The most important statement in this regard - particularly for the public - would be the rebranding of branches as Williams and Glyn, and I would be grateful to hear what steps you could take to accelerate this element of the process," Cable wrote.

"Williams and Glyn has the potential to be an important challenger in the small business market in particular and therefore many, including me, are anxious to see it in operation as soon as possible," he wrote.

RBS has missed its first EU deadline for the sell-off and now has until 2016.

The Federation of Small Businesses (FSB) is also calling for more competition in banking.

The banking industry has been facing the possibility of a competition investigation since 2011, when Sir John Vickers' independent commission on banking recommended one take place.

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Source: Guardian (UK)

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