RBS Nears $500 Million Sale of Private Equity Assets

Dutch fund of funds Alpinvest is close to taking over Royal Bank of Scotland’s European private equity fund portfolio.

(May 25, 2010) — The Royal Bank of Scotland (RBS) is coming close to finalizing a deal with Dutch pension fund Alpinvest over the sale of its European private equity portfolio. According to the Financial Times, the agreement is expected to be worth about 400 million euros ($500 million).

RBS’ actions reflect a growing trend: As tougher regulations make holding investments in private equity funds less profitable, banks have been trying to rid themselves of these assets. The moves by RBS show a desire to simplify its operations and extensive balance sheet, removing itself from its non-central business and complying with European Union rules, the FT said.

RBS, which is 83%-owned by the U.K. government after its bailout during the financial crisis, is also in talks pertaining to the sale of its US private equity portfolio for about $250 million, with an announcement of the European deal expected within the next few weeks.

Following its near-collapse during the crisis, RBS received the largest state aid in the world. According to its latest quarterly report, RBS first quarter net attributable loss improved to £248 million ($356.3 million) from a loss of £765 million in the fourth quarter of 2009. Still, the UK government owns a majority stake in the bank.

As a condition of accepting this aid, the Wall Street Journal reported, the EU has required it to slash market share in specific segments.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742