RBS to offload its international private bank arm

Monday 11 August 2014 14.02
The deal could be valued at around $1 billion
The deal could be valued at around $1 billion

Royal Bank of Scotland has confirmed that it's considering selling the international arm of its private bank.

Reuters quoted sources as saying the deal could be valued around $1 billion.

The moves comes as the British government leans on RBS to focus more on domestic lending.

The move means Coutts, founded in the 18th century and best known as banker to the Queen of England, may be split into two businesses.

One will be based in Britain and the other in Zurich, from where it runs operations in Hong Kong, Singapore, Abu Dhabi and Dubai that manage nearly $36 billion in client assets.

RBS, which is set to disclose the plans to staff on Monday, has attracted a variety of offers from a range of bidders including unnamed Asian and North American parties for Coutts International.

The sale could be net RBS between $720 million and $1.1 billion, based on a multiple of 2 to 3% of assets under management, said a person with knowledge of the matter.

A spokeswoman for RBS declined to comment on the news.

RBS is 81% owned by the state following a £45 billion rescue operation post-financial crisis and is under pressure from lawmakers to focus on lending to UK households and businesses and help support the country's economic recovery.

It has undergone a major restructuring in order to pay back taxpayers' funds and eventually return to private ownership, and appeared a step closer to doing both after it posted a surprise £1 billion quarterly profit recently.

As part of the RBS overhaul, Coutts' international unit, which employs 1,200 staff, has dramatically cut the number of countries it serves.

RBS said in February that Coutts should sit within RBS's own commercial and private bank, in order to better connect with that unit's wealthy entrepreneurs and other potential clients.

Last year, Coutts International's operating profit stood at 103 million francs when stripping out provisions, including for a U.S. tax crackdown.

The Swiss arm of Coutts is one of 100-plus Swiss banks who have reason to believe they may have committed tax offences by helping wealthy Americans evade taxes - and are eligible for a non-prosecution agreement if they come clean and face fines.