RBS set to sell £3 billion of property loans

Published 08th Jul 2010

Royal Bank of Scotland (RBS.L) plans to dispose of up to 3 billion pounds of property loans, the Financial Times reported on Wednesday, as it continues to whittle down its non-core assets.

Together with Lazard the Edinburgh-based bank has been drafting a structure to offload its vast portfolio of real estate debt that has weighed on its balance sheet, the paper said, citing people close to the talks.

RBS and Lazard declined to comment.

"The interesting part of this portfolio is whether it's the really distressed side of the loan book, the 'just a bit stressed' side, or the performing side," said Andrew Radkiewicz, managing director at Pramerica Real Estate Investor.

"We suspect it's not the loan book that RBS wants to keep relations with for the long term ... so this is veering more towards more complicated loans," he said, adding the portfolio sale could likely come with substantial vendor financing.

Pramerica, a unit of U.S.-based Prudential Financial (PRU.N), last month raised 150 million pounds to invest in European real estate debt.

RBS is running down its non-core business and last week gave analysts details on the pace of its plan. It aims to reduce its non-core third party assets from 201 billion pounds at the end of 2009 to 143 billion at the end of this year and to 20-40 billion by the end of 2013.

Part-nationalised at the height of the financial crisis, RBS was ordered by the European Union to sell a string of assets to compensate for state aid.

It has exited or sold over 20 businesses in the last 14 months and several more are expected soon.

Last weekend Chief Executive Stephen Hester told a German paper the bank aims to put the conditions in place for the British government to start selling its 83 percent stake in the bank next year.

Source: ' Reuters '

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