The Royal Bank of Scotland has agreed a £600m pre-initial public offering injection into a standalone bank that will reserrect the Williams & Glyn’s brand, which will comprise of 314 branches in the UK.
The business has now been separated into a standalone bank, with the capital injection including funding from a consortium of investors led by global financial services specialists Corsair Capital and Centerbridge Partners.
The pre-IPO investment came in the form of a £600m bond, to which RBS itself commited around £270m. The investment will be exchangeable for a significant minority interest in Williams & Glyn’s at the time of its IPO, expected in the next two years.
RBS said the transaction underscores the attractiveness of the new Williams & Glyn’s as an “investment and provides meaningful benefits for RBSG”, including the opportunity to accelerate the timetable for divestment.
William’s and Glyn’s was established as a brand in 1970 after RBS merged its banking subsidiaries in England and Wales. It disappeared from high streets after the business was fully integrated with RBS in 1985.
Sir Philip Hampton, RBS chairman, said: “Williams & Glyn’s will play an important role in the UK banking landscape and will be an excellent new addition to the market, with a particular strength in small business banking - a sector that is so crucial to the UK’s economic recovery.
“Much has been done already in building the standalone business, and today’s announcement provides more certainty for our customers and employees ahead of a flotation.”
The new Williams & Glyn’s business had total assets of £19.7bn, customer deposits of £22.2bn and risk-weighted assets of £13.3bn, as at 30 June 2013. It generated an operating profit of £168m during the first half of 2013, providing a post-tax return of around 16 per cent.