Moves will strengthen balance sheets
Scottish banks sell toxic loans to US fund Cerberus
Royal Bank of Scotland Group and Clydesdale have offloaded billions of pounds of bad loans to a US property fund.
RBS will receive £1.1 billion from selling an Irish loan book to an affiliate of Cerberus Global Investors which is also buying £1.2bn of loans from Clydesdale’s owner National Australia Bank.
The sale of the RBS loans form part of the continued disposal of assets in its “bad bank” division in order to strengthen its capital position and reduce higher risk exposures.
NAB’s decision to sell a parcel of UK commercial property loans will heighten speculation that it is preparing Clydesdale and its sister bank Yorkshire for flotation.
NAB expects to book a small gain in its March 2015 half year accounts, and an estimated £127 million of capital will be released for the NAB Group when the transaction is settled.
The sale will cut the portfolio to £836m, against an original balance of £5.6bn in October 2012 when the run-off portfolio was first established.
NAB said in a stock market statement in Australia that the assets being sold will reduce the higher risk loans in the portfolio by 93%.
Group chief executive Andrew Thorburn said: “This is an important step forward, effectively bringing closure to one of our legacy positions. The sale of these higher risk loans in the NAB UK CRE portfolio is another important milestone in our strategy of reducing our low returning legacy assets and sharpening our focus on our core Australian and New Zealand franchises.
“Pleasingly the remaining NAB UK CRE loans are largely strong performing loans, and we will look at other options to manage this small remaining portfolio.”
NAB and Cerberus will work together on a smooth transition for impacted customers. This work will include appropriate advance notice to enable customers to understand and plan for the transfer.
Thorburn, who took over in the summer, has indicated that he wants to sell the UK banks, probably via a flotation.