Royal Bank of Scotland (RBS) has announced that it could scrap the sale of Williams & Glyn (W&G) division after an agreement was reached between the HM Treasury and the European Commission (EC).

The Treasury has informed RBS that the Commissioner responsible for EU competition policy plans to propose to the College of Commissioners to open proceedings to gather evidence on an alternative plan.

The bank is required to sell W&G as one of the conditions for the £45bn government bailout it received during the financial crisis.

The alternative plan includes RBS setting up a £750m fund to help challenger banks boost their business banking capabilities. The fund will be administered by an independent body.

If adopted, this alternative plan would replace the existing requirement to achieve separation and divestment by 31 December 2017.

RBS added that the reintegration of the Williams & Glyn branch network would lead to additional restructuring charges during 2017 and 2018.

RBS CEO Ross McEwan said: “Today’s proposal would provide a path to increased competition in the SME market place. If agreed it would deliver an outcome on our EC State Aid divestment obligations more quickly and with more certainty than undertaking a difficult and complex sale and would provide much needed certainty for customers and staff.”