RBS in talks over Amro disposal
Royal Bank of Scotland today confirmed it was in talks to sell ABN Amro’s Australian and New Zealand operations.
The news emerged as fears mounted in the City over a possible £2bn (€2.5bn) shortfall from the proposed sale of its insurance arm.
National Australia Bank is one of a number of parties in discussions to buy the ABN assets, acquired by RBS amid the Dutch bank’s near £50 billion takeover last year.
At the same time RBS is looking to offload its Churchill and Direct Line insurance business, but this was dealt a major blow last night when one of the leading candidates pulled out of the running.
Speculation grew today that Zurich’s withdrawal would add to pressure on the sale price, should RBS decide to proceed with the disposal.
Sandy Chen, banking analyst at Panmure Gordon stockbrokers, estimated the business could now fetch around £5bn (€6.2bn) to £5.5bn (€6.9bn) – far short of the reported £7bn (€8.8bn) price hoped for by management.
RBS is hoping to secure £4bn (€5bn) from offloading non-core assets, but Mr Chen said the insurance arm sale may only achieve £1.5bn (€1.9bn) to £2bn (€2.5bn) in capital gains.
The UK’s second largest bank has been seeking to boost its finances after suffering hefty write-downs amid the credit crunch and following the ABN purchase.
It recently completed a £12bn (€15bn) cash-call to investors in Britain’s largest corporate rights issue and has also been offloading assets, such as train leasing firm Angel Trains for £3.6bn (€4.5bn).
But Mr Chen warned the insurance arm sale now faced “weak prospects”, with Allstate and Allianz thought to be the only bidders left from the original list.
He said: “A shortfall in gains would explain the talks between RBS and NAB about a potential disposal of ABN’s Australia business.
“In general, we view the disposal of profitable operating businesses in order to address the capital strains from an overpriced acquisition is a recipe for value destruction,” he added.
RBS remained tight-lipped on the sale process of ABN Australia and New Zealand, saying only that it is “proceeding with examining options under our review process and will advise the market of the outcome once complete”.
The bank added: “It is very much business for usual for us at both ABN AMRO and RBS – we’re focusing on our clients and our transactions.”
RBS, which owns NatWest, was among the worst affected by the credit crunch in the UK banking sector.
It unveiled another £5.9bn (€7.4bn) of write-downs in April, after taking a £2.5bn (€3.1bn) hit last year.
The ABN takeover, which was led by RBS, has also been seen as being expensive, completed at the height of the market just before the credit squeeze took hold last summer.
