Royal Bank of Scotland (RBS) shares fell Tuesday after European authorities said they will investigate plans proposed by the state-owned lender to support smaller lenders instead of selling some of its small-business branches.
The European Competition Commission, which approved the British government's £45.5 billion bailout of RBS in 2009, has asked for a number of divestments in order to keep the rescue within EU rules that forbid state aid. RBS had hoped to sell 30 branches of Williams & Glyn by the end of this year, but had failed to find buyers, prompting the British government to proposed a £750 million package of support that would ensure smaller rivals, the so-called challenger banks, could compete fairly.
"RBS is the leading bank in the UK SME banking market and received significant state support during the financial crisis," said Commissioner Margrethe Vestager. "The Commission is now seeking the views of all interested parties on an alternative package proposed by the UK to replace RBS's commitment to divest Williams & Glyn. We can only accept this proposal, if it has the same positive effect on competition as the divestment of Williams & Glyn would have had. This is important for fair competition."
RBS shares were marked 0.73% lower at 237 pence each, trimming their three-month gain to just under 1.3%.