RBS moving closer to privatisation following $5bn Saudi bank merger

As a result of a Saudi Arabian bank deal announced yesterday, Royal Bank of Scotland (RBS) could potentially be a step closer to returning to private ownership, as it would be able to relinquish $5bn in the Saudi bank.

The proposed merger of HSBC-backed Saudi British Bank (Sabb) and Alawwal would allow RBS, a bank that is 70 per cent owner by the UK government, to massively sell down its stake in Saudi-based Alawwal.

RBS, along with Santander and Fortis, took 40 per cent of Alawwal when it acquired ABN Amro in 2007. Although RBS only owned 15 per cent of the Saudi bank, it had to hold £5.9bn on its balance sheet to cover Alawwal in the instance that it went insolvent.

If the proposal went ahead, the merged Sabb-Alawwal will become the third largest bank in Saudi Arabia of which RBS will own approximately 5 per cent, meaning that it will only need to hold just under £1bn to cover that risk.

This news will mean that investors will look more favourably upon RBS, helping the government sell down its stake at the smallest possible loss to UK taxpayers.

    Share Story:

Recent Stories


Helping landlords make their cash work harder
MoneyAge Editor, Adam Cadle, talks to Family Building Society BDMs, Arif Kara and Nathan Waller, about the resilient BTL market, the wide variety of landlords that Family Building Society caters for, and how niche products like an Offset mortgage can help improve cashflow.

An outlook on the BTL market
MoneyAge Editor, Adam Cadle, talks to Landbay senior regional account manager, Alex Witham, about current market sentiment within the BTL space and Landbay’s success in this area

Empowering advisers: A decade of education in Later Life Lending with Air Academy
Michael Griffiths is joined by chairman of Air Club and former founder and CEO of Air, Stuart Wilson, and head of the Air Academy, Daniel Holden, to look back on a decade of business focused learning at the Air Academy.


FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.