27th Mar 2015 10:40
LONDON (Alliance News) - The Royal Bank of Scotland Group PLC on Friday confirmed that it has struck a deal to sell the international operations of its Coutts private banking and wealth management business to Swiss firm Union Bancaire Privée.
The sale will include client relationships outside of the UK and associated staff, RBS said. The asset sold will include relationships managed by Coutts from Switzerland, Monaco, the United Arab Emirates, Qatar, Singapore and Hong Kong.
RBS confirmed it will retain the UK private banking and wealth management operations of Coutts.
The total assets under management in the Coutts International business at the end of December totalled CHF32 million, with total risk weighted assets at CHF2 billion.
RBS said the deal is subject to regulatory approvals. It did not provide any financial details on the deal, though it said it expects to receive a price at a premium. Earlier the Financial Times reported that UBP is expected to pay around USD600 million to USD800 million for the acquisition, citing two people familiar with the situation.
The bank added the price UBP will pay will be partly based on the assets under management at closing. It expects the initial closing of the deal to occur in the fourth quarter of 2015, when a majority of the business will transfer to UBP. The remaining assets will transfer in the first part of 2016.
The deal was handled by Goldman Sachs Inc, which advised RBS on the sale.
RBS said it expects the resulting capital benefit of the sale to be modest after it writes off goodwill related to the business and after taking into account anticipated exit and restructuring costs. It said it will treat the sale as a disposal group in its first quarter results, resulting in an expected charge of GBP200 million.
"Last year we set out a clear strategy to create a truly UK-focused bank. This announcement is another important step in that process. Following an extensive review, it was clear that the bank we are building would not be the most appropriate owner of the business being sold," said RBS Commercial & Private Banking Chief Executive Alison Rose.
"We gave careful consideration to identifying a buyer with the capability to take on this business in order to minimise the impact on clients and staff. We believe that in UBP we have found a good long term owner for this business," Rose added.
"Our Private Banking brands are integral to RBS, supporting our ambition to make this the number one bank for customer service, trust and advocacy in the UK," Rose said.
RBS shares were down 1.7% to 344.422 pence on Friday, one of the worst-performing stocks in the FTSE 100.
RBS said it was considering options for the Coutts International business in August last year, following a review of its high-net-worth business.
In February 2014, RBS outlined plans to achieve a 15% return on equity in each business by focusing on its strengths in the UK. Under that decision, RBS decided to bring its private banking businesses together with its commercial business.
A subsequent review of its high net worth business has supported a "substantial increase" in the bank's focus on growing its UK side of the business, according to a bank memo published in August, hence the decision to launch a review of the international unit.
The bank then hired Goldman Sachs in October to handle the sale of the business and a number of potential suitors were soon reported to be showing an interest, including Italian bank Intesa Sanpaolo SpA and FTSE 250-listed Anglo-South African financial services group Investec PLC.
The Times had reported on Thursday that Michael Morley, the Chief Executive of Coutts & Co, is likely to leave the private bank in the next few months.
By Sam Unsted; [email protected]; @SamUAtAlliance
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