The EU Commission has waved through the Royal Bank of Scotland’s restructuring plans, claiming that the measures will give the bank a sustainable future.
RBS intends to sell off 318 branches in the UK - equating to 14% of its branch network - in return for state aid and its participation in the government’s asset protection scheme.
The sale will include part of the RBS branch network in England and Wales - originally branded Williams & Glyn's - and its NatWest brand in Scotland. The bank, which is 70% owned by the taxpayer, will also offload RBS Insurance and Global Merchant Services, plus its stake in commodities trader RBS Sempra Commodities.
EU Commissioner Nellie Kroes says: “This case has been one of the most complex the commission has had to deal with during the financial crisis. I am very pleased with the result. The Royal Bank of Scotland will take a number of significant steps to return to long-term viability.”
However, she added that the Commission would step in again and get the bank to sell off more assets if it “does not deliver on its balance sheet reduction targets by 2013."
The Commission also cleared the participation of RBS in the government's asset protection scheme, in which it will insure £282 billion of toxic assets.
Under the terms of the scheme, RBS is responsible for the first £60 billion of losses - up from the £42 billion. The taxpayer will then foot the bill for the bill for remaining losses.
Last week, the bank announced that around £168 billion of these toxic assets were originated overseas, with around £75 billion in continental Europe relating largely to its disastrous acquisition of ABN Amro. Around £43 billion come from the US.