Money Matters, Simplified.
RBS plans to sell non core-assets to Aberdeen
by Jamie Anderson - January 8, 2010 - comments
RBS shares are down almost 27 percent from a year ago and underperforming the Stoxx Europe 600 banks Index. When the news of the deal with Aberdeen broke, the shares slid another 0.6 percent
Edinburg, Scotland, January 8 -- Continuing its endeavor to restructure its business after being bailed out by the U.K. government last year, the Royal Bank of Scotland Group PLC (RBS.L) announced that it will sell off part of its non-core asset management businesses to Aberdeen Asset Management PLC (ADN.L).
The fund firm, Aberdeen, will pay $135 million (84.7 million pounds) to acquire the said assets from the 84 percent state-owned bank. The deal will be a 100 percent cash transaction.
Deal makes strategic sense
The deal augments investment areas such as funds-of-hedge-funds to its product lines for Aberdeen. The acquisition also cements Aberdeen’s position as the U.K.'s largest independent fund manager by amount of money under management.
Chief Financial Officer Bruce Van Saun said of the proposed deal, "This transaction represents another step in our plan to restructure RBS around its core customer franchises."
"Aberdeen is a well regarded and well established global asset manager and will be an excellent new owner for the business. We look forward to building an ongoing relationship with Aberdeen primarily focused around the provision of RBS Asset Management's funds of funds and multi-manager products," added Saun.
To raise cash and fund the deal, Aberdeen would resort to a non pre-emptive placement of around 84 million new ordinary shares, or close to 8.3 percent of its current share capital.
Scotland based Aberdeen has also signed a distribution pact with RBS Wealth Management for a five year period. Under the agreement, Aberdeen will have a sales access route through RBS' private client franchise, including that of Coutts in the U.K.
Plans to sell
RBS had posted a record loss of 24.1 billion pounds in 2008. The bank has launched a multi-year plan to return to profitability and is in the midst of a host of asset sales.
In April, the Edinburgh, Scotland based financial services behemoth RBS sold half of its stake in the insurance company Linea Directa Aseguradora to its joint venture partner, Bankinter SA of Spain.
Up on the blocks are its commodities-trading joint venture, RBSSempra Commodities , global merchant services unit, aviation finance business and its remaining retail franchises in Asia.
The bank’s asset disposal program was hindered when its $87 million proposed sale of Pakistani unit to Karachi-based MCB Bank did not get regulatory approval. The bank intends to persist and scout for a new buyer for the Pakistani business.