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Royal Bank of Scotland ordered to sell off branches

In line with European Union state aid rules, Royal Bank of Scotland is rumoured to be on the verge of receiving a request to reduce the company's UK market share by around one sixth. The situation has evolved because of the significant state aid received from the UK government, something which was paid out before it was rubber stamped by the EU Competition Commissioner, and the market share the company now holds in the UK. So will this impact upon Royal Bank of Scotland in the future?

There is no doubt that the decision by the EU Competition Commissioner will have serious implications in the short to medium term for Royal Bank of Scotland, not only the fact that the company has been told to reduce its market share but also the fact that potential buyers now know the company is a forced seller. As a consequence, Royal Bank of Scotland is unlikely to receive a "fair price" for the operations which are sold purely and simply because it cannot afford to turn them down.

Whether this will impact on the company's profitability in the short, medium or long term remains to be seen, but the very fact that the EU Competition Commissioner is yet again dabbling in UK affairs will not be welcomed in many quarters.

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