On Monday 18 September, the European Commission approved the solution proposed by the British authorities as an alternative to the commitment for Royal Bank of Scotland (RBS) to sell Williams & Glyn.
The decision follows the agreement in principle concluded on 26 July of this year between the Commission and the British authorities. Having refused to sell Williams & Glyn on 17 February, the British government put new measures to the Commission to prevent competition distortions on the market for banking services for SMEs (see EUROPE 11729), whereupon the Commission opened an in-depth investigation on 4 April to assess the measures (see EUROPE 11762).
The alternative put forward by the UK involves transferring 3% of the market shares in RBS to rival banks on the British banking services for SMEs market. The resources of the 'Capability and Innovation Fund' will be awarded to eligible rival banks, which will allow them to compete with RBS on the market for the provision of banking services to SMEs. The 'Incentivised Switching Scheme' will, moreover, ensure that eligible rival banks have funds to offer incentives to client SMEs to encourage them to switch bank.
Having looked at the measures proposed, the Commission found that they were sufficient to replace the commitment to sell Williams & Glyn, as they will reinforce competition on the British banking services for SMEs market. The institution therefore concluded that the alternative solution proposed by the United Kingdom was compatible with EU state aid rules.
Readers may recall that RBS was recapitalised by the British authorities at the end of 2008 when it was on the point of collapse. This recapitalisation led to the state taking a majority controlling stake in the bank, which was authorised by the Commission on 14 December 2009 (see EUROPE 10040) subject to certain conditions, for instance selling Williams & Glyn the end of 2017. (Original version in French by Lucas Tripoteau)