The Church of England has taken a stake in a new "challenger" bank being created from 314 branches of the Royal Bank of Scotland. 

RBS is being forced to sell the branches under European Union rules for the government bailout it received in 2008.

The dormant Williams & Glyn's brand is being revived in the £600 million deal to form the new bank, which will take on the major high street players.

The consortium backing the new bank includes the Corsair Capital investment fund and Centerbridge Partners.  

The Church of England said the new bank would have a focus on ethical standards and service the needs of retail and small to medium-sized enterprises (SMEs).  

It has a projected 5% market share of the SME and mid-corporate banking markets, and a 2% share of UK personal current accounts.

Andreas Whittam Smith, the Church of England's first estates commissioner, said: "The Church Commissioners are excited to have the opportunity to be involved in creating a UK challenger bank operating to the highest ethical standards and giving consumers more choice. We are delighted that the Royal Bank of Scotland recognised the strengths of our bid and the consortium's vision, and have chosen the consortium as their preferred bidder."

Andrew Brown, Secretary to the Church Commissioners, said: "This is a great opportunity for the Commissioners to invest in an exciting opportunity for the benefit of the serving and retired clergy, bishops, cathedrals and the wide work of the Church of England throughout the country especially in areas of need and opportunity."