Royal Bank of Scotland Group plc (RBS) is planning to sell off assets worth £4.3 billion ($6.71 billion), in continuity in its efforts to shrink the balance sheet, according to Wall Street Journal.
RBS plans to vend off 318 U.K. branches to Spain 's Banco Santander SA (STD) for around £1.8 billion ($2.81 billion). It also plans to dispose of its Global Merchants Services (“GMS”) division to Advent International Corp. and Bain Capital LLC for £2 billion ($3.12 billion) and £2.5 billion ($3.90 billion), respectively.
RBS, owned 83% by the US government, is disposing of its businesses as part of the disposal program enforced on it after being bailed out by the state. UBS AG (UBS) was appointed to manage the auctions earlier this year.
The RBS branches being considered for sale are located in England and Wales , NatWest branches in Scotland , and the accounts of some small and midsized business customers across the U.K. Collectively, these branches have £23.6 billion ($36.83 billion) in assets and 6,000 employees.
The company aims to make the final announcement before the first half of 2010 earnings release expected on August 6, 2010.
In the past weeks, bidding was going on for the sale of branches, which was finalized at $2.81 billion with Banco Santander SA. Initial bidders included another Spanish bank Banco Bilbao Vizcaya Argentaria SA (BBVA) among others.
On the other side, due to competitive pricing, complexity of the deal and technology related issues in running the business, only a few bidders auctioned for the GMS division.
Subsequent to the asset sale, as per the European Union requirements, RBS will be left with its insurance business to sell.
Earlier in July, the closest competitor of Royal Bank of Scotland , HSBC Holdings plc (HBC) acquired the retail and commercial banking businesses of the company in India . Royal Bank of Scotland ’s Indian portfolio had a gross asset value of $1.8 billion as of March 31, 2010 . The deal will likely be wrapped up by the first half of 2011, subject to regulatory approvals.
Though the company is experiencing improvement in the recent quarters due to continued impairments, it expects to report a loss in the first half of 2010.
BANCO BILBAO VZ (BBVA): Free Stock Analysis Report
HSBC HOLDINGS (HBC): Free Stock Analysis Report
ROYAL BK SC-ADR (RBS): Free Stock Analysis Report
BANCO SANTAN SA (STD): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
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