RBS fires starting gun on part-sale of Coutts
Bank issues prospectus for £640m sell-off of international division
ROYAL Bank of Scotland (RBS) has formally kick-started the auction for its private banking business Coutts International, with sources suggesting the prospectus has been issued to at least 10 suitors.
The bank, still 81 per cent owned by UK tax-payers, expects to receive first round bids for the business before Christmas.
Swiss banks Credit Suisse and Julius Baer, as well as Kuala Lumpur-based Malayan Banking Berhad, are among those invited to take part in the auction.
It is thought a sale could net RBS in the region of $1 billion (£640m).
However Coutts’ UK division, whose clients famously include the Queen, footballers and celebrities, is not for sale.
Coutts’ UK operation is in the process of becoming more closely integrated within the bank’s UK divisional structure, along with private banking and wealth management business Adam & Co.
The strategy follows a review of the Coutts business, unveiled in August, which has led to RBS seeking bids for the international component.
Under chief executive Ross McEwan, RBS has whittled what were formerly seven divisions down into three.
This has seen its commercial and private banking operations come together under a plan to streamline RBS into a UK-focused retail bank.
Sources suggest RBS and adviser Goldman Sachs have issued sale documents for Coutts International, which manages about $36 billion (£24m), to companies such as Singapore lenders DBS Group Holdings and United Overseas Bank, Societe General and Bank J Safra Sarasin.
BNP Paribas and Canada’s Bank of Montreal have also been linked with potential bids.
However RBS said it was unable to say who the bid documents have been issued to because of the confidentiality of the sale process.
Bids are being sought for the international arm of Coutts in its entirety, but there has been speculation that RBS may consider breaking it up into two divisions – Europe and Asia – in order to drive up the price and maximise shareholder value.
Previous reports have suggested the strategy has merit because it would entice potential bidders in the Far East who would otherwise be discouraged due to a crackdown on tax evasion in Europe.
It has been suggested potential bidders in Singapore and Japan may be reluctant to take on exposure to European clients who could face tax investigations.
Around 40 per cent of Coutts International’s clients are based in Asia, with the rest in Europe and the Middle East.
In November Italy’s biggest retail bank, Intesa Sanpaolo, was reported to be trying to acquire Coutts in its entirety. It is reputedly looking to deploy capital after it emerged as one of the eurozone’s strongest banks following the latest stress tests carried out by the European Central Bank.
Should RBS decide to sell the business in one chunk, it is thought the Swiss private banks would be in the driving seat.
The sale of Coutts, which has around 1,800 of its 3,000 workforce in the UK, would allow RBS to focus more on lending in the UK.
Coutts International employs about 1,200 staff across operations in Switzerland, Singapore, Hong Kong, Monaco, India and Qatar.
Founded on the Strand in London by a Scottish goldsmith in 1692, it has been part of RBS since it took over NatWest in 2000.
RBS declined to comment on the Coutts International sale process.
The bank unveiled a £1.3 billion third quarter profit last month -a £2bn turnaround from the year prior - but Mr McEwan warned that “significant conduct and litigation issues will continue to hit our profits in the quarters ahead”. This came after the bank had set aside £400 million to pay potential fines for manipulating currency markets
Shares in RBS closed down 3.5p, or 0.87 per cent, at 400p.