RBS may sell stake to Abu Dhabi

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ADIA headquarters in Abu Dhabi, UAE

UK bank Royal Bank of Scotland (RBS) is holding talks with sovereign wealth funds from GCC countries to sell off the 82 per cent British government’s holding, the BBC reported on Monday, March 26. In a first step, it could sell between ten per cent and one third of its stake to the Abu Dhabi Investment Authority (ADIA) or its related investment vehicles. ADIA is the world’s largest sovereign wealth fund with estimated assets of about $630 billion, holding stakes in international finance corporations such as Citigroup, Barclays, UniCredit, and Merrill Lynch.

However, for the UK government this would likely be a highly loss-making sale as RBS’s share price is currently trading at the half of what has been paid for the shares in 2008 and 2009, when the UK Treasury put £45.5 billion of taxpayers’ money into RBS to stabilise the bank after the financial crisis. At current prices, the stake is worth much less, which has evoked criticism in the UK public. The government bought in for an average share price of 50.2 pence. RBS’s share price on Monday stood at 28 pence.

It is understood that the UK goverment might only sell an initial stake of the bank to sell-off prices to stoke further investor interest and push up the share price, ideally to the break even point.

So far, there has been no confirmation neither from the UK goverment nor from RBS of the sale talks. According to British news reports, the UK government is talking to several investors with no fixed timetable for the sale. No buyer has yet been selected. People close to the situation have said that an initial sale may be possible before Christmas 2012, while a disposal of the entire 82 per cent would be extremely unlikely before the end of next year.

ADIA in the past has been keen to expand its holdings in international financial institutions. The fund bought in several banks since the financial crisis. Among its many other holdings are Daimler, Virgin Galactic, and the football club Manchester City.

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Reading Time: 2 minutes

ADIA headquarters in Abu Dhabi, UAE

UK bank Royal Bank of Scotland (RBS) is holding talks with sovereign wealth funds from GCC countries to sell off the 82 per cent British government’s holding, the BBC reported on Monday, March 26. In a first step, it could sell between ten per cent and one third of its stake to the Abu Dhabi Investment Authority (ADIA) or its related investment vehicles. ADIA is the world’s largest sovereign wealth fund with estimated assets of about $630 billion, holding stakes in international finance corporations such as Citigroup, Barclays, UniCredit, and Merrill Lynch.

Reading Time: 2 minutes

ADIA headquarters in Abu Dhabi, UAE

UK bank Royal Bank of Scotland (RBS) is holding talks with sovereign wealth funds from GCC countries to sell off the 82 per cent British government’s holding, the BBC reported on Monday, March 26. In a first step, it could sell between ten per cent and one third of its stake to the Abu Dhabi Investment Authority (ADIA) or its related investment vehicles. ADIA is the world’s largest sovereign wealth fund with estimated assets of about $630 billion, holding stakes in international finance corporations such as Citigroup, Barclays, UniCredit, and Merrill Lynch.

However, for the UK government this would likely be a highly loss-making sale as RBS’s share price is currently trading at the half of what has been paid for the shares in 2008 and 2009, when the UK Treasury put £45.5 billion of taxpayers’ money into RBS to stabilise the bank after the financial crisis. At current prices, the stake is worth much less, which has evoked criticism in the UK public. The government bought in for an average share price of 50.2 pence. RBS’s share price on Monday stood at 28 pence.

It is understood that the UK goverment might only sell an initial stake of the bank to sell-off prices to stoke further investor interest and push up the share price, ideally to the break even point.

So far, there has been no confirmation neither from the UK goverment nor from RBS of the sale talks. According to British news reports, the UK government is talking to several investors with no fixed timetable for the sale. No buyer has yet been selected. People close to the situation have said that an initial sale may be possible before Christmas 2012, while a disposal of the entire 82 per cent would be extremely unlikely before the end of next year.

ADIA in the past has been keen to expand its holdings in international financial institutions. The fund bought in several banks since the financial crisis. Among its many other holdings are Daimler, Virgin Galactic, and the football club Manchester City.

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