May 26, 2023

RBS agrees to sell Luxembourg fund business

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777ceb73-a72d-4877-b6b1-087c94cb0361By Emma Dunkley From Financial Times

Royal Bank of Scotland has struck a deal to sell its Luxembourg fund arm to private equity group Blackfin Capital Partners as part of a restructuring aimed at focusing on UK retail and commercial banking.

The sale of the state-backed bank’s Luxembourg-domiciled fund governance business, called RBSL, for an undisclosed sum is at a significant premium to book value, according to one person familiar with the situation.

The deal is part of the restructuring unveiled by chief executive Ross McEwan earlier in the year to shrink the bank and retrench from 25 of the 38 countries in which it operates, following seven successive years of net annual losses.

The bank, which is 73 per cent owned by the taxpayer after the government began selling down its stake two weeks ago, said the sale “is in line with the strategy to make RBS a smaller, more focused bank”.

Laurent Bouyoux, president of Blackfin, said: “Our common objective is to capitalise on RBSL’s assets — a highly qualified team, a strong platform and a proven business model — to seize the growth opportunities arising in the asset management industry.”

He added that Blackfin is planning to position RBSL as the “leading European independent player in its market”.

The business, which serves as an independent custodian of fund assets on behalf of other companies, had about £20bn of assets under administration at the end of last year, and had a compound annual growth rate of more than 8 per cent between 2012 and 2014.

One of its largest clients is the European subsidiary of the Industrial and Commercial Bank of China, the biggest lender by assets in the world, according to people familiar with the situation.

The sale marks a significant step in RBS’s exit from Luxembourg, although the lender still has a wholesale banking branch in the country.

RBS has made several disposals in the past few months, including the sale of Coutts International to Union Bancaire Privée, resulting in a £200m goodwill writedown for the UK lender.

Mr McEwan said he intends to sell RBS’s entire stake in Citizens, the US retail bank, by the end of the year, 12 months ahead of the original deadline, which he described as an “integral” part of plans to boost capital.

The bank revealed in April it had appointed PwC to advise on the sale of the offshore fund business. Linklaters is also advising the bank, while Arendt & Medernach is advising Blackfin.

The completion of the deal is subject to approval of the Luxembourg regulator, Commission de Surveillance du Secteur Financier, and is expected to complete in the fourth quarter of this year.

IMAGE: (FILES) In a file picture taken on January 27, 2012 a picture shows the Royal Bank of Scotland (RBS) sign outside a branch of the bank in central London. Britain’s government has begun selling its majority stake in bailed-out Royal Bank of Scotland (RBS) to reduce state debt and kick-start the lender’s full return to the private sector, the Treasury said on August 4, 2015. AFP PHOTO / CARL COURTCARL COURT/AFP/Getty Images ©AFP

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