RBS has paused work on the launch of its own challenger bank

REUTERS/Luke MacGregor

A worker sweeps in the foyer of a Royal Bank of Scotland office in the City of London August 6, 2010.

The Royal Bank of Scotland has halted work on the launch of its challenger bank brand Williams & Glyn, according to a report in the Financial Times.

RBS said last year it was aiming to separate the business from the group by the first quarter 2017. However, the bank also said it was seeking buyers for the brand, and delay could mean it has found one, the FT says.

A spokesman for RBS declined to immediately comment.

The government bailed out RBS in 2008 and 2009 to the tune of £45.4 billion ($70.1 billion) at a price of 500p per share. The government still owns 81% of RBS.

RBS has to hive off Williams & Glyn (W&G) under the terms of its state aid deal with the EU, just like Lloyds did with the sale of retail unit TSB. RBS announced it would spin off its W&G division in 2013. Market commentators remarked at the time that the move wasn't a positive one.

Williams & Glyn has 1.8 million customers. Once it is ready to be sold off, W&G will be made up of 300 RBS branches in England and Wales and a handful of NatWest branches in Scotland.