RBS paid Church of England consortium £180m in Williams & Glyn flotation bond deal

Edinburgh-based RBS has been ordered by the EU to sell-off the branches as a condition of its £45 billion taxpayer bailout at the height of the financial crisis in 2008.

And, as news of interest in the Williams & Glyn business from Glasgow-based Clydesdale emerged today, documents filed at Companies House have revealed the sums paid by still 73 per cent state-owned RBS to the consortium.

As well as the Church of England, the consortium included Corsair Capital and Centerbridge.

According to The Guardian, the consortium, formed three years ago to participate in the flotation of W&G, put £600 million into RBS through a bond, which would later be exchanged for shares when the new bank floated on the stock exchange.

The deal was to have seen the consortium receive a stake of between 30 per cent and 49 per cent when W&G floated and the £600 million bond converted into shares.

The consortium used £330 million of its own money to pay for the bonds and borrowed £270 million from RBS.

Documents at Companies House for Lunar Investors – a limited-liability partnership set up by members of the consortium – show that in the period 26 September 2013 to end-December 2015 RBS paid £184m in interest to the holders of the bond.

The consortium was charged £18 million in interest for its £270m loan.

RBS said at the time the transaction was announced in September 2013 that it would pay the consortium a rate of interest between 8 per cent and 14 per cent a year.

The documents at Companies House indicate that RBS was paying the higher rate of interest to the investors. It paid £100m for the 15-month period to end of December 2014 and £84m for the 2015 calendar year.

The newspaper said RBS would not comment on the payments, nor would Corsair.

But the Church Commissioners, which manages £7 billion of the Church of England’s investments and helps funds dioceses and parishes and helps pay the pensions for clergy, said it had invested in W&G “due to our belief in the importance of competition in the banking sector and the vital role of challenger banks.

“We are pleased to have been able to work with Williams & Glyn on ethics in banking and are grateful to the management team for their enthusiasm on this issue,” the Church Commissioners said.

It is reported to have a 10 per cent stake in the consortium.