Business | Banking

Abu Dhabi may acquire 33% of RBS

Adia expected to be most likely investor as UK government seeks to offload stake

  • By Shehab Al Makahleh, Staff Reporter
  • Published: 00:00 March 28, 2012
  • Gulf News

Abu Dhabi: The UK government has discussed selling some of its shares in Royal Bank of Scotland (RBS) to an Abu Dhabi sovereign wealth fund as the authorities continue to look for ways to cut the state's stake in the lender.

A senior banker told Gulf News that the offer to own a third of RBS shares "is a strategic decision and it has been taken at the right time".

"The talks have been going on for six months, and nothing is likely to materialise for the next few months," according to Reuters, adding that Abu Dhabi could end up with a stake of more than a third, though it has not decided which of its entities would hold the stake.

Waddah Taha, financial adviser at Zarouni Group, told Gulf News that the UAE is diversifying its external investments in many countries.

"The three sovereign wealth funds in Abu Dhabi that are capable of taking this step are either Mubadala Development Company, Abu Dhabi Investment Authority [Adia] and the International Petroleum Investment Company [Ipic]," said Taha.

"Since Mubadala, the Abu Dhabi-based strategic investment and development company, has announced investing $2 billion (Dh7.35 billion) as primary investment in Brazil in exchange of 5.63 per cent in a form of preferred equity interest and since Ipic is interested mainly in oil investments, the most probable option will be Adia," Taha said.

He said that because the RBS has been incurring heavy losses for four years after the £45 billion (Dh266.85 billion) bailout in 2008, the UK government's stake rose to 82 per cent in RBS. "Therefore, any talk about 33 per cent of shares to be purchased by Abu Dhabi means that the UK government will be selling part of its shares in the bank," he added.

Reuters stated that the UK government has for months been negotiating with Abu Dhabi sovereign wealth funds and wanted a deal to be agreed by Christmas. Adia is the world's largest sovereign wealth fund with an estimated $627 billion of assets.

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