Royal Bank of Scotland

Royal Bank of Scotland grew into one of the world’s biggest banking groups through aggressive acquisitions, but overstretched itself when it tried to buy Dutch banking giant ABN Amro in 2007. The British government pumped 45 billion pounds (US$73 billion) into RBS to keep it afloat in 2008, leaving it 82 per cent state-owned. As of November 2012, the taxpayer faced a loss of 19 billion pounds on the investment.

BusinessBanking & Finance

UK asks Rothschild to advise on possible RBS break-up

Treasury says Rothschild will advise on case for transferring remaining RBS toxic loans into so-called “bad bank”

PUBLISHED : Thursday, 04 July, 2013, 10:14am
UPDATED : Thursday, 04 July, 2013, 10:14am

Britain’s finance ministry has appointed investment bank Rothschild to advise on the potential break-up of part-nationalised Royal Bank of Scotland .

Finance Minister George Osborne said in June that Britain would examine whether to split the bank up, after acknowledging a sale of the government’s 81 per cent stake in the bank remained a long way off.

The Treasury said on Wednesday Rothschild would provide financial advice on the case for transferring RBS’s remaining toxic loans into a so-called “bad bank”. Slaughter & May will provide legal advice in the review, which is expected to be completed by the autumn.

Rothschild will receive 850,000 pounds (HK$10.0 million) for its advice, a source familiar with the matter said, a cost that could be picked up by RBS. Details of the contract will be published in the next three weeks.

RBS and Rothschild declined to comment.

The Treasury said more external advisors, including those specialising in asset valuation, would be appointed in coming weeks.

RBS, still lumbered with toxic loans from a boom-era property binge in the UK and Ireland and buffeted by its role in a global interest rate-fixing scandal, remains a thorn in the side of the government and the wider economy.

In his annual address to London’s financial elite, Osborne said RBS probably should have been split into a good bank and its soured assets hived off into a bad bank in 2008, when the lender was close to collapse.

Osborne also signaled the government’s intention to start selling shares in Lloyds Banking Group.


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