Church of England teams up with the City to buy 314 RBS branches and create new 'ethical' High St bank called Williams & Glyn's
- Church and its partners will revive the dormant Williams & Glyn's name
- New challenger bank will operate ethically, according to the CofE
- Consortium also includes Corsair, Centerbridge and RIT Capital Partners
The Church of England is among investors buying 314 bank branches from Royal Bank of Scotland for £600million under a deal that will see them rebranded as Williams & Glyn's.
The Church Commissioners, alongside financial firms Corsair Capital and Centerbridge Capital, will revive the dormant Williams & Glyn's name but it is not yet known when the brand will start to appear on British high streets.
RBS, which is 80 per cent state-owned following its near-collapse during the financial crisis, has been forced to sell the branches under European rules. A deal to sell them to Santander for around £1.65bn fell apart last year.
Ethical challenger: Church of England is among investors buying 314 bank branches from RBS for £600m
The new business will operate 'to the highest ethical standards', according to the Church Commissioners.
The Williams & Glyn business will return to the high street as a 'challenger bank' to the major players in the industry, with a particular focus on small business banking - a sector seen as vital to the UK's recovery.
Bank history: Williams & Glyn's used to be a subsidiary of RBS but it was absorbed into the main bank in the 1980s
The new business will take over 308 RBS branches and six NatWest branches in Scotland. The sites are spread across a 'broad national footprint', according to RBS.
They serve nearly 1.7million customers, including personal account holders and small-to-medium businesses. The business will take on a £19.7billion loan book and £22.2billion in customer deposits. Annual operating profits were £168million in the first half of 2013.
The deal involves RBS issuing a bond to the investors ahead of a stock market floatation which will take place at a later date. This will convert to cash and minority share stake worth a total of £600million at the time of the share sale.
John Maltby, former head of commercial banking at Lloyds, will be chief executive of the bank with Philip Green, former chief executive of United Utilities, as chairman.
The consortium of investors is made up of Corsair, whose vice chairman is former Labour trade minister Lord Davies, as well as Centerbridge and RIT Capital Partners, an investment trust led by Lord Rothschild, plus the Church Commissioners.
The commissioners are responsible for managing an investment portfolio to support the Church of England's work across the country.
Andreas Whittam Smith, first estates commissioner, said: 'The Church Commissioners are excited to have the opportunity to be involved in creating a UK challenger bank operating to the highest ethical standards and giving consumers more choice.'
RBS chairman Sir Philip Hampton said: 'We are delighted to be working in partnership with these investors to establish a new challenger bank for UK customers.
'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 move follows the revival of TSB after another state-backed bank, Lloyds, was forced to hive off more than 600 of its branches.
Shares in RBS were down 6.05p at 365.05p in mid-afternoon trading.
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