Royal Bank of Scotland Group PLC Update on RBS's remaining State Aid obligation (1995M)
July 26 2017 - 11:31AM
UK Regulatory
TIDMRBS
RNS Number : 1995M
Royal Bank of Scotland Group PLC
26 July 2017
The Royal Bank of Scotland Group plc
Update on RBS's remaining State Aid obligation regarding the
business previously described as Williams & Glyn
26 July 2017
Following the consultation process carried out by the European
Commission ("EC") and a market testing exercise carried out by HM
Treasury ("HMT"), RBS has been informed by HMT that an alternative
remedies package has now been agreed in principle between HMT and
the EC Commissioner responsible for competition.
This revised package is focused on the following two remedies to
promote competition in the market for banking services to small and
medium enterprises ("SMEs") in the UK.
-- A GBP425m Capability and Innovation Fund, to be administered
by an independent body, that will grant funding to a range of
competitors in the UK banking and financial technology sectors;
and
-- An Incentivised Switching Scheme which will provide GBP275m
of funding for eligible challenger banks to help them incentivise
SME customers of the business previously described as Williams
& Glyn to switch their accounts and loans from RBS paid in the
form of "dowries" to the receiving bank. An additional GBP75m will
be made available by RBS to cover customers' costs of
switching.
This revised package will be submitted to the EC's College of
Commissioners for approval and if agreed will form the basis of a
new term sheet in relation to RBS's remaining State Aid
commitments. It is expected to come into effect during H2 2017,
upon which RBS will no longer be obliged to achieve separation and
divestment of the business previously described as Williams &
Glyn by 31 December 2017.
A GBP750m provision was recognised in RBS's 2016 Annual Results
in relation to the previously proposed package of measures. An
incremental charge of GBP50m in relation to the revised package and
its implementation costs will be recorded in the RBS H1 2017
results which will be announced 4(th) August 2017, taking the total
provision to GBP800m.
RBS will incur running costs for the duration of the scheme,
which are estimated at around GBP35m and will be substantially
incurred before the end of 2019. Furthermore, under the terms of
the revised package, should the uptake within the Incentivised
Switching Scheme not be sufficient, RBS could be required to make a
further contribution, capped at GBP50m.
Ross McEwan, RBS CEO, said "We welcome the progress that HMT and
the EC Commissioner responsible for competition have made on
agreeing an alternative package of remedies to increase competition
in the SME marketplace. We await a formal decision on this proposal
which would allow us to resolve our final State Aid divestment
obligation."
Investor Relations
+44 (0) 20 7672 1758
RBS Media Relations
+44 (0) 131 523 4205
Forward Looking Statements
This announcement contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including those related to RBS and its subsidiaries' regulatory
capital position, risk-weighted assets, impairment losses and
credit exposures under certain specified scenarios. In addition,
forward-looking statements may include, without limitation,
statements typically containing words such as "intends", "expects",
"anticipates", "targets", "plans", "estimates" and words of similar
import. These statements concern or may affect future matters, such
as RBS's future economic results, business and capital plans and
current strategies. Forward-looking statements are subject to a
number of risks and uncertainties that might cause actual results
and performance to differ materially from any expected future
results or performance expressed or implied by the forward-looking
statements. Factors that could cause or contribute to differences
in current expectations include, but are not limited to,
legislative, fiscal and regulatory developments, competitive
conditions, technological developments, exchange rate fluctuations
and general economic conditions. These and other factors, risks and
uncertainties that may impact any forward-looking statement or
RBS's actual results are discussed in RBS's UK annual report and
accounts and interim reports and materials filed with, or furnished
to, the US Securities and Exchange Commission, including, but not
limited to, RBS's Reports on Form 6-K and most recent Annual Report
on Form 20-F. The forward-looking statements contained in this
announcement speak only as of the date of this announcement and RBS
does not assume or undertake any obligation or responsibility to
update any of the forward-looking statements contained in this
announcement, whether as a result of new information, future events
or otherwise, except to the extent legally required.
MAR
This announcement contains information that qualified or may
have qualified as inside information for the purposes of Article 7
of the Market Abuse Regulation (EU) 596/2014 (MAR). For the
purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055, this announcement is made by Matt Waymark, Head of
Investor Relations for The Royal Bank of Scotland Group.
Legal Entity Identifier: 2138005O9XJIJN4JPN90
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