The Royal Bank of Scotland has warned that it could miss a deadline set by European regulators to spin off its 300-strong Williams & Glyn branch network because of technology issues.
The bank was ordered to dispose of the branches by the end of 2017 in exchange for its £45 million taxpayer bailout in the wake of the 2008 economic crisis.
However, in a statement, it now says that after "extensive analysis" it has concluded that there is a "significant risk" that the deadline will be missed.
"Due to the complexities of Williams & Glyn's customer and product mix, the programme to create a cloned [IT] banking platform continues to be very challenging and the timetable to achieve separation is uncertain."
The news means that the cost of the spin off is now likely to be "significantly greater" than the £1.2 billion already cited by the majority taxpayer-owned bank.
RBS is now "exploring alternative means to achieve separation and divestment" of the W&G network, which has around 1.4 million retail customers and 200,0000 small business clients.
This is not the first time that technology has got in the way of a deal for the branches; Santander agreed to buy them back in 2010 only to pull out the deal two years later, blaming IT integration costs and complications.
Shares in RBS - which reports its first quarter results on Friday - closed down 2.8%, at 244.8 pence, on the news.