RBS to sell fund manager for £300m

Royal Bank of Scotland is selling the majority part of its £50bn asset management arm as part of a series of fund-raising moves.
RBS is engaged in the final stages of negotiating the cost of its entry into the Government?s insurance scheme for toxic assets Photo: GETTY

The disposal will break up RBS Asset Management (RBSAM), with RBS retaining the upmarket private bank Coutts, while putting the other half up for sale with a £300m price tag.

Morgan Stanley, which is advising RBS on the sale, has sent out information memorandums on the company to a series of private equity and trade buyers ahead of next month’s bid deadline.


It comes as RBS is engaged in the final stages of negotiating the cost of its entry into the Government’s insurance scheme for toxic assets, which is expected to be concluded within weeks. The bank is keen to minimise the expected increase in the state’s shareholding.

RBSAM manages money on behalf of institutions and high net worth individuals and specialises in investing in alternative asset classes, such as private equity, credit and hedge funds.

Although RBS has received several expressions of interest in Coutts, it is not believed to be up for sale. Consequently the Coutts’ assets within RBSAM are being held by the bank.

A sale of the operation is one of several actions, including a rights issue, being pursued by RBS to raise cash towards the cost of taking part in the Government’s Asset Protection Scheme (APS).

RBS is expected to have to pay up to £19.5bn to join the APS and insure £325bn of its most troubled loans against losses under an agreement made with the Government in February. That plan involves RBS issuing £19.5bn worth of non-voting 'B’ shares to the Government as a fee. Such a move will lift the Government’s stake in the business from 70pc to about 85pc.

While the bank recognises that the taxpayers’ shareholding will inevitably increase, its new chief executive, Stephen Hester, is keen to cede as little as possible.

The more cash Mr Hester can raise through disposals such as RBSAM, the less shares he will have to issue to the Government.

The bank has already sounded out major investors about backing a rights issue or share placing to raise up to £5bn and other disposals may also be considered.

This week RBS said: “As part of our overall assessment of the APS, ahead of the board making a recommendation to shareholders, the group is considering whether there are any partial alternatives to the issuance of 'B’ shares to the Government.”