Bloomberg News

RBS Gains After Talks With Middle East Investors on Stake

March 27, 2012

The logo of the Royal Bank of Scotland Group Plc is displayed outside the company's headquarters in London. Photographer: Simon Dawson/Bloomberg

The logo of the Royal Bank of Scotland Group Plc is displayed outside the company's headquarters in London. Photographer: Simon Dawson/Bloomberg

Royal Bank of Scotland Group Plc gained after the U.K. government held talks with potential investors including Middle Eastern sovereign wealth funds about a sale of some of its 82 percent stake in the lender.

The shares rose 3.3 percent to 28.67 pence in London, giving the bank a market value of 31.6 billion pounds ($50 billion). The government paid an average 50.2 pence a share for its stake, when it injected 45.5 billion pounds into the Edinburgh-based lender from 2008 in the costliest rescue of any bank in the world.

The government made presentations to investors in countries including Abu Dhabi, two people with knowledge of the situation said yesterday. The discussions are at an early stage and no deal is imminent, said the people, who declined to be identified because the talks are private.

The government could start selling its stake in RBS at a loss, Jim O’Neil, head of market investments at U.K. Financial Investments Ltd., which manages the government’s holding in the bank, commented to a House of Commons Treasury committee on March 14.

“Reports of a potentially significant share sale to Abu Dhabi have already been watered down, with no imminent developments anticipated,” Ian Gordon, a banking analyst at Investec Ltd. in London wrote in a note to clients today. “That said, it is no secret that RBS’s determined and energetic investor relations team reach far and wide in their quest to broaden -- and eventually normalize -- the company’s ownership structure.”

Amanda Staveley, a U.K. financier that helped Abu Dhabi invest in Barclays Plc in 2008, is advising the emirate on a possible deal with RBS, Reuters reported earlier, without saying where it got the information.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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