RBS share price: Bank confirms talks over sale of IP&ED business

on Nov 18, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Monday, November 18: The Royal Bank of Scotland Group (LON:RBS) said today it has entered into talks with an unnamed “third party” for the sale of its structured retail investor products and equity derivatives (IP&ED) business. The bank didn’t disclose any details, saying only that “no agreement has been entered into and there is no certainty that an agreement will be reached”.

The statement came after Risk.net reported last week that RBS had agreed to sell its structured product portfolio, estimated to be worth about £175 billion, to BNP Paribas (EPA:BNP), citing industry sources. According to the website, the British lender took the decision on November 13 after a careful selection among 31 initial bidders. In the final round, BNP Paribas was preferred ahead of French rival Societe Generale, US Decura and Morgan Stanley.

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Last month, BNP Paribas agreed to acquire a €12.5 billion (£10.5 billion) equity derivatives portfolio from Credit Agricole, in line with its strategy to consolidate the shrinking market for equity derivatives by taking over run-down portfolios. Last year, BNP Paribas picked up a structured products portfolio from Macquarie with a putative value of €1.0 billion.

According to Risk.net, RBS and BNP Paribas will now continue with the negotiation and documentation of final terms and conditions, with a final agreement expected to be signed by the first week of next year.
In June, RBS advised that it would be seeking to dispose of the IP&ED business as part of a restructuring drive, without giving specific reasons. Some analysts believe that the bank, which was rescued in a £45.5 billion government bailout in 2008, was pressed to take that decision because the IP&ED products are seen by some regulators as overly controversial for a bank needing to minimise reputational risk.

The UK government, which currently holds 81 percent of RBS, has been insisting that the bank should focus on lending to British households and businesses to support a faster economic recovery. In the last five years, RBS has narrowed significantly its investment banking business, but a further restructuring is expected, with the government noting recently that the division has one the highest cost/income ratios in the group and has generated disappointing returns for several years now.

RBS has initiated a thorough review of its business, aiming to sharpen its customer focus and cut the cost-to-income ratio by about 10 percentage points from 65 percent currently. The results of the review are due to be announced in February, alongside the 2013 annual report.
The RBS share price has been volatile this morning UTC, to be at 332.73 at 10:20 UTC, up 0.8 percent from Friday’s close.
**As of 10:23 UTC buy RBS shares at 332.40p.**
**As of 10:23 UTC sell RBS shares at 332.10p.**
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.
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