Shares of Clydesdale and Yorkshire Banking Group (CYBG) were trading lower in Australia on Wednesday. It was down 2.72% at A$4.30 (£2.72) as of 4.14am GMT. This was amid its announcement overnight that it had formally proposed to buy Williams and Glyn banking operations from the Royal Bank of Scotland Group (RBS).

CYBG was formed by the National Australia Bank in February 2016, in advance of the divestment of its UK business through a stock market flotation. Its offer now comes as a potential lifeline to RBS.

In a statement, CYBG said it "has engaged in discussions with RBS and has made a preliminary non-binding proposal to RBS in relation to its Williams and Glyn operations." It, however, clarified that there was no guarantee that the transaction will materialise.

Williams & Glyn refers to about 300 branches of RBS, which the latter is expected to divest by the end of 2017, under the terms of its £45bn ($54.73) bailout. RBS is required by the European Union (EU) to divest this portion of its business after the British government took an 84% stake in the group during the 2008 UK bank rescue package, which the EU classed as state aid.

RBS has been trying to sell Williams & Glyn for about seven years. It has, however, suffered multiple delays that have cost the state-backed bank about £1.5bn. RBS had earlier this year, attempted to sell this business to Spanish lender Santander. The latter, however, walked away from the deal reportedly because of a disagreement on price.

Missing the 2017 deadline would be a setback for both the UK government and RBS investors. For the government, the delay will further postpone its plans to dispose or cut down its stake in RBS. For investors, a further delay will affect their returns as RBS had announced in 2015 that returning any excess capital to them, such as through dividends, would depend on disposing Williams & Glyn.

With regards to the potential deal value, the Williams & Glyn business is said to be valued at about £1.3bn. However, according to unnamed analysts cited by the Financial Times, the sale could happen for a much lesser price.

Commenting on the same, a RBS spokesperson said, "We continue to explore options in meeting our obligations to the European Commission. We have been clear that there is interest in the business and this remains the case."