Royal Bank of Scotland reported widening first-half losses and has scrapped plans to turn its Williams & Glyn unit into a standalone bank, as Britain faces a period of economic instability caused by its Brexit vote.

The part-nationalised Edinburgh-based bank booked £2.05 billion of losses attributable to shareholders for the first half of 2016 on Friday, up from a £179 million loss in the first half last year.

RBS also said it has scrapped plans to build an independent technology platform for its Williams & Glyn unit, citing complexity and the lower interest environment. “The board concluded that the risks and costs inherent in the programme are such that it would not be prudent to continue,” the bank said in the statement. “RBS will instead prioritise exploring alternative means to achieve divestment.”

Spain's Banco Santander has made a formal offer to take over Royal Bank of Scotland's Williams & Glyn business, two sources familiar with the matter said earlier this week.

Restructuring

Chief executive Ross McEwan is battling to complete an unprecedented restructuring of the lender, which includes a raft of asset sales, job cuts and multi-billion dollar settlements for past misconduct. Those issues have compounded a challenge of finding new sources of profitable business in a low interest rate economy hit by feeble credit demand.

The bank’s total income fell by almost a fifth to £6.06 billion, while the spike in losses was partly driven by a £630 million charge for corporate restructuring, £345 million of which related to Williams & Glyn.

The bank also set aside an additional £450 million to compensate customers missold payment protection insurance and a €180 million provision for redress in its Irish mortgages business. It warned restructuring costs are expected to remain high in 2016, totalling more than £1 billion.

“We continue to deal with a range of uncertainties in the external environment and we will also have to manage conduct-related investigations and litigation, including US RMBS, throughout 2016, and substantial related incremental provisions may be recognised during remainder of year,” RBS said.

RBS, which was rescued with a £45.5 billion-pound state bailout during the 2007-09 financial crisis, has not made an annual profit since 2007. The bank would suffer the third biggest losses among European banks in any new economic crisis, the continent's banking regulators said last week. – Bloomberg