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Royal Bank of Scotland is to be freed of its EU obligation to create a challenger bank for small business after Brussels agreed a preliminary deal for the lender to spend £750m on alternatives to boost competition.
The British government, which owns 72 per cent of RBS, said it had drawn up with EU competition commissioner Margrethe Vestager a way for the bank to escape from having to sell 306 of its branches under the revived Williams & Glyn brand.
The provisional deal is a boost for RBS, clearing away one of the two big uncertainties hanging over the bank, alongside the expected multibillion fine by US authorities for mis-selling mortgage securities before the financial crisis.
RBS has already spent more than £1.5bn over almost five years trying to meet the EU requirement to boost competition by selling the branches and their customers as a condition of being bailed out by the UK taxpayer in the 2008 crisis.
Ross McEwan, RBS chief executive, said: “Today’s proposal would provide a path to increased competition in the SME market place. If agreed it would deliver an outcome on our EC state aid divestment obligations more quickly and with more certainty than undertaking a difficult and complex sale and would provide much needed certainty for customers and staff.”