RBS set to announce disposal of Bank of China stake

| January 13, 2009 | 0 Comments

According to reports, the Royal Bank of Scotland (RBS) is set to announce the sale of its 4.3% stake in Bank of China, which is valued at over £1.8 billion.

The rumour of the sale has brought with it speculation that similar transactions will arise.

Late last year, Swiss bank UBS sold its entire 1.5% stake in Bank of China, while just last week Bank of America sold a 2.5% stake in China Construction Bank.

According to analysts, a considerable amount of the £34 billion of capital invested by financial groups in Chinese may be sold.

One of the primary reasons for this is the fact that the future of Chinese banks is deteriorating as the economy faces heavy falls in exports and factory closures.

In related news, there are concerns over RBS’ exposure to the collapse of US chemical giant Lyondell after it was revealed that the bank acquired a £2 billion loan to the company in its acquisition of ABN Amro.

Last week, Lyondell, the US subsidiary of the Dutch-headquartered firm, filed for Chapter 11 bankruptcy following a fall in demand for its products.

A spokesperson for RBS admitted its exposure to Lyondell and said the bank is hoping to recover some of the cash from the sale of assets.

RBS has been attempting to sell its insurance arm, which includes the Churchill and Direct Line brand names. However, there was speculation last week that the bank was set to abandon the sale.

RBS was bailed out by the taxpayer in November due to the small take-up of its £15 billion share offer by investors, the Government now owns 57.9% of the bank.

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