Ditching its attempt to float retail bank Williams & Glyn as a separate business gave further evidence that recovery for Royal Bank of Scotland (RBS) will take much longer than management, and even analysts, expected. The banking giant has spent around £1.5bn in its efforts to spin off the challenger bank, £345m of which was incurred during the first half of this year. But management concluded the associated risks and costs meant it would be unwise to carry on with its plans.
This is more bad news for shareholders in the state-owned bank since the divestment of Williams & Glyn was a condition of dividend payments being resumed. The December 2017 deadline for offloading the division is still in place but management reckon this may be more difficult to achieve in a post-referendum, low interest rate environment. What’s more, given management says the divestment is likely to cost more than the £1.7bn initially forecast, the sale will likely result in more exceptional charges.