Business | Banking
RBS may struggle to sell UK and US assets
Royal Bank of Scotland Group Plc's potential sale of its $2.8 billion (Dh10.3 billion) stake in Bank of China Ltd. won't make it any easier to offload at least $12 billion of other UK and US assets.
- Bloomberg
- Published: 23:38 January 8, 2009
London: Royal Bank of Scotland Group Plc's potential sale of its $2.8 billion (Dh10.3 billion) stake in Bank of China Ltd. won't make it any easier to offload at least $12 billion of other UK and US assets.
RBS, the biggest government-controlled bank in the UK, has been seeking for the past eight months to sell a stake in its £5 billion ($7.5 billion, Dh26.5 billion) Churchill and Direct Line British insurance units.
It may also be looking to sell Providence, Rhode Island-based Citizens Financial Group Inc, which could be worth £5.8 billion.
"It's going to be an uphill battle for RBS to sell assets, like its insurance unit," said Simon Willis, analyst for UK financial stocks at NCB Stockbrokers Ltd in London. "The more people sell assets and the further stock prices fall, the more difficult it will be for RBS."
The Edinburgh-based bank yesterday said it's "examining" the sale of its Bank of China holding. The bank may seek to use the estimated profit of $1.2 billion on the possible sale to help repair a balance sheet ravaged by writedowns in 2008.
The bank's chief executive Stephen Hester promised to update investors next month on asset sales.
RBS may consider selling its entire US unit in order to focus on "core" capital markets and UK divisions, analysts at Citigroup Inc have said. Citizens Financial Group, which has about 1,600 branches and $161 billion of assets, may be valued at about £5.8 billion, it added.
Spain's Banco Santander SA could be a buyer for Citizens Financial, Andrea Williams, who helps manage European stocks at Royal London Asset Management, said in October.
RBS bought Citizens in 1988 and merged it with Charter One Financial, which it bought for $10.3 billion in 2004.
The bank's former CEO Fred Goodwin made $90 billion of acquisitions to turn RBS into one of the biggest banks in the world during his eight years in charge.
Goodwin's acquisition of ABN Amro Holding NV in 2008, part of the world's biggest banking takeover, triggered a third of the bank's first-half writedowns and eroded capital.
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