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RBS to sell Middle East M&A business

RBS to sell Middle East M&A business

Five potential parties interested in business - source; Sale part of RBS' global exit from investment banking; Mideast corporate finance head to leave post

January 16, 2012 12:26 by



Part-nationalised Royal Bank of Scotland is in talks to sell its mergers and acquisitions business in the Middle East and cut some jobs as part of a global restructuring at the U.K. bank, its regional head said on Monday. Simon Penney, RBS’ chief executive for Middle East and Africa, told Reuters the bank would focus on debt products, risk management and transactional banking.

“We’ll be selling our M&A business in the region but everything else remains the same,” Penney said, adding that “less than five people will be leaving” as a result.

“It is a global decision to exit cash equities and M&A. We had some pretty good mandates live and we’ll see all deals closing. We will honor all client obligations but we won’t be originating any new business,” he said.

RBS, 83 percent owned by the UK government, said last month it was working on four M&A deals in the region including Saudi Arabia-based Aujan Industries sale of a 50-percent stake to The Coca-Cola Company for $980 million.

“There will be a limited impact in so far we won’t be generating M&A revenues from the region but with a regional team of 220 people, we will make sure nothing changes,” Penney said.

Two sources familiar with the matter told Reuters earlier that the bank could complete the sale in coming months with close to five interested parties already eyeing the business.

Penney declined to comment on possible buyers of the business or on the time frame to close the deal.

The move is part of a global shake up in which RBS plans to cut another 4,450 jobs bowing to pressure from the UK government.

Tom Emmet, RBS’ managing director and head of corporate finance and equity capital markets for the region, will leave as part of the shake up, one of the sources familiar with the matter said.

The lender hopes to close four acquisition deals in the region in 2012, including the Aujan sale, Emmet told Reuters in an interview last month.

RBS, Britain’s fifth biggest bank, said last week it would exit the investment banking arena, and cut jobs as it faces government pressure to shut down risky operations.

The bank aims to cut the balance sheet of its former global banking and markets business by 120 billion pounds ($184 billion) to 300 billion in the next three years under the plan.

Several European banks have unveiled plans to offload assets in the Gulf Arab region as they look to raise capital and exit non-core businesses to cope with the euro zone crisis.

British lender Lloyds Banking Group is in talks to dispose of its operations in the United Arab Emirates, sources told Reuters last week, with Abu Dhabi Commercial Bank emerging as the frontrunner to pick up the business.

ADCB bought RBS’ retail assets in the UAE in 2010 for about $100 million and last year hired a former RBS Mideast executive as its group chief operating officer.

Meanwhile, French bank Credit Agricole said last year that it will close its regional mergers and acquisitions business and move the operations back to its Paris office. (By Dinesh Nair and Mirna Sleiman)



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1 Comment

  1. Tarek Aziz on January 17, 2012 7:13 am

    In continuation of the global financial crisis of 2008/09, the Arab Springs and the ongoing unrest in the MENA region, one should remember that banks in the UAE have restructured loans totaling (approx) USD 38 billion (a large percentage of this pertains to the Dubai Emirate). These loans (after 3 hair-cuts) have to be services and repaid. In the next 4 years, an amount of USD 12 billion principal and USF 2 billion in interest is to be paid to all banks operating in the UAE. It is anybody’s guess how many foreign banks
    (who came to make a quick buck) will be left in the country in the next 24 months.

     

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