19th Feb 2014 13:07
LONDON (Alliance News) - The Royal Bank of Scotland Group PLC said Wednesday that it has agreed to sell certain assets and liabilities within its markets divisions to BNP Paribas S.A. for an undisclosed sum, as the bailed-out bank continues to scale back its markets division and focus on its UK retail banking business.
In a statement, RBS said the proposed deal would include certain assets and liabilities related to its structured retail investor products and equity derivatives businesses, as well as certain market-making activities.
"The consideration is not material within the context of the RBS Group but the proposed transaction is expected to transfer risk management of, and/or market making for, up to GBP15 billion of liabilities over time," RBS said in a statement.
BNP Paribas said exclusive talks on the transaction began in November 2013 and that it expects to receive clearance for the deal during the first-half of 2014.
If the deal is approved, RBS said that it expects the disposal to be phased over 2014 and 2015.
Under RBS's new strategy for its Markets division, which was announced in June 2013, the bank has been focusing the division on fixed income capabilities across rates, foreign exchange, asset-backed products, and credit and debt capital markets, while pulling away from structured product area which require more capital.
The Markets business has been working to scale back its balance sheet and reduce its risk-weighted assets to GBP80 billion on a Basel III basis by the end of 2014 as regulators increase the pressure on banks to de-risk their balance sheets and hold more capital to back up their activities.
The bank said that it will work with BNP Paribas to create a banking business transfer scheme pursuant in according with Part VII of the UK Financial Services and Markets Act 2000, which will be subject, amongst other matters, to court and regulatory approvals.
RBS also noted that there is no requirement for investors to take any action at this time.
The bank last week appointed Les Matheson as permanent chief executive of its UK Retail Banking division. Matheson had been acting head since September when he stepped in on an interim basis after former head Ross McEwan was promoted to lead the group.
In January, the bank announced plans to sell its Chicago-area retail branches and some other business operations to a subsidiary of US Bancorp, part of a continuing process by the bailed-out UK bank to shrink its US operations.
RBS shares were Wednesday quoted at 360.03 pence, down 0.17 pence, or 0.1%.
By Alice Attwood; [email protected]; @AliceAtAlliance
By Samuel Agini; [email protected]; @samuelagini
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