Royal Bank of Scotland today announced the sale of its metals, oils and European energy business for $1.7bn as it looks to meet EU demands following its multi-billion pound state bail-out.
RBS will have a 47% share of the proceeds from the sale of the commodities trading business, which it owns with Sempra Energy.
The deal with JP Morgan for RBS Sempra Commodities – which does not include its North American power and gas businesses – is the latest sell-off for RBS as it looks to comply with European competition rules after a series of state bailouts saw the taxpayer stake in the bank rise to 84%.
Other disposals are set to include RBS-branded branches in England and Wales, its NatWest branches in Scotland, the Churchill and Direct Line insurance arm and parts of its investment banking business.
Today RBS said the sale was subject to regulatory approvals, but added that it had “given our commitment to the European Commission to divest this interest”.
Group finance director Bruce Van Saun said: “We are pleased to have expeditiously reached agreement on the divestment of these unique assets.
“We believe we have struck a fair price and contract with JP Morgan.”
The division covered in the sale makes up about half of the total RBS Sempra business and RBS is expected to break even on the disposal when the remaining section is sold off.
The bank invested $1.7bn for its 51% stake in the business in 2008. Sempra has a 49% share.
Mr Van Saun said the remaining parts of the business were performing well and “remain high value”.
RBS Sempra Commodities will “continue to actively consider various ownership alternatives” for these remaining parts of the business, he added.
It is understood that JP Morgan had been looking at buying the whole business, but later decided not to pursue the North American divisions.
The bank already has a commodities presence after the purchase of Bear Stearns in 2008.
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