RBS Says Reviewing Options After Middle East Corporate Loan Book Sale

Royal Bank of Scotland (RBS) is reviewing its network in the Middle East, it said on Wednesday, after a media report said the British lender had put its corporate loan book in the region up for sale.

The statement from the bank, 81 per cent owned by the British government, was issued after Bloomberg News reported RBS had hired PricewaterhouseCoopers to sell its Middle Eastern corporate loan book, citing unnamed sources.

The bank has been focusing its attention on its home market under a strategy unveiled in February by chief executive Ross McEwan, as it tries to rebuild its reputation after one of the biggest bailouts in British history during the global financial crisis.

“We are looking at options across our CEEMEA (Central and Eastern Europe, Middle East and Africa) network, but no decisions have been taken,” the bank said in a statement.

“It is business as usual and we remain committed to serving our customers in the region.”

A banking source told Reuters that PwC was working with RBS, without elaborating. A spokeswoman for PwC declined to comment.

RBS’s credit exposure to the CEEMEA region, as well as Central Asia and supranationals such as the World Bank, was 19.1 billion pounds ($30.5 billion) in 2013, representing 3.4 per cent of its 573 billion pounds of credit risk assets, its annual report said.

In the Middle East, RBS has offices in Qatar and the United Arab Emirates (UAE) and offers services to corporate and institutional clients including financing, risk management and transaction services, as well as private banking to clients through its Coutts subsidiary, according to its website.

SLIM DOWN

Many international banks have been evaluating their Middle Eastern operations in recent years, as the cost of maintaining them at a time of constraints in home markets, higher capital requirements from regulators and increased competition from cash-rich local banks makes doing business uneconomical.

In 2014, Barclays sold much of its retail banking business in the UAE to Abu Dhabi Islamic Bank.

Standard Chartered put much of its loan book for small and medium-sized UAE businesses up for sale after pressure from regulators in the United States but then decided to close customers’ accounts instead.

Should RBS try to sell some or all of its regional corporate loan book, there would likely be a number of interested local banks, said a second banking source, although he questioned whether they would be prepared to pay the kind of price RBS would expect for the assets.

RBS has already taken steps to slim down its business in the region. In 2010, it sold its UAE retail business to Abu Dhabi Commercial Bank.