RBS to push for extension to 2014 to sell branches

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The Independent Online

Royal Bank of Scotland and the Treasury are preparing to lobby the European Commision to allow the taxpayer-controlled bank more time to sell 316 branches after a deal with Santander UK collapsed.

Virgin Money and the private-equity group JC Flowers are both looking at reviving offers they put forward before losing out to Santander two years ago.

The current deadline for a sale is by the end of 2013, but RBS is looking to be allowed to reach an agreement on a deal which could complete in 2014.

It will argue that it needs more time to complete a sale as decreed by the European Union and is also pointing out that EU rules on state aid for banks have changed in the five years since it received £45bn of taxpayers' money.

Shares in RBS initially fell by as much as 4 per cent, before closing down 2.8p at 268.1p.

Sir Philip Hampton, the chairman of RBS, is likely to spearhead negotiations with the EU alongside Greg Clark, Financial Secretary to the Treasury.

Mr Hampton, pictured, said: "What's changed since the original decision is the climate around state aid. The commission has been much, much more flexible. It used to be a pretty severe regime but they are making different judgements.

"The UK retail banking market is more competitive now than it has been for decades."

However, RBS said that since the branches it is being forced to sell are highly profitable, it benefits from each day of continued ownership.