February 20, 2017 / 8:21 AM / 5 months ago

RBS shares up 5 percent on alternative plan to Williams & Glyn sale

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The logo of the Royal Bank of Scotland (RBS) is seen at an office building in Zurich March 27, 2015.Arnd Wiegmann/File Photo

LONDON (Reuters) - Royal Bank of Scotland Group (RBS.L) shares rose 5 percent on Monday, after the lender said on Friday evening it had proposed abandoning the disposal of its Williams & Glyn business after a seven-year struggle to sell the unit to meet European Union state aid demands.

RBS instead put forward an alternative series of measures, worth around 750 million pounds ($932.48 million), to help newer, smaller "challenger" banks and boost competition among lenders.

Analysts said that removing the obligation to dispose of Williams & Glyn could pave the way for RBS to resume paying dividends, but cautioned that the new proposals did not look too favourable for the taxpayer-backed lender.

"Overall the prospective deal looks better for the 'eligible challenger banks' than for RBS," Joseph Dickerson, analyst at Jefferies, wrote in a research note on Monday.

Reporting by Lawrence White; editing by Jason Neely

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