UP TO one-third of Royal Bank of Scotland, which owns Ulster Bank in Ireland, could be sold by the British government to the Abu Dhabi sovereign wealth fund, it has emerged.
Talks between the treasury in London, which owns 82 per cent of the bank, and the Gulf state have been under way for weeks, but they could last for the rest of the year, sources who spoke to the BBC said.
Any deal could come at a loss of billions to the British taxpayer. RBS is currently valued at 28p a share, far below the return needed to get back the £45 billion the British authorities ploughed into the bank to save it in 2008 after it was on the brink of bankruptcy following over-rapid expansion.
The Gulf state, which is preparing for life after oil and gas exploration, believes the bank offers value, while the treasury believes a loss-making sale of a stake now could make it easier to sell the rest later for a profit.
The talks have focused on the possibility that between 10 and 33 per cent of RBS could be sold.
The move would have significant implications for Ulster Bank, though Abu Dhabi has a history of letting management manage.
Last night, the treasury did not deny the story, saying that its ambition from the start has been to “repair and return RBS to full health so that it is able to support the UK economy in the future.
“The current strategy is working to achieve that. The government’s policy has always been to return RBS to the private sector, but only when it delivers value for money for the taxpayer,” the treasury said.
There was suspicion in Westminster last night that the timing of the leak about the Abu Dhabi talks may be linked to Downing Street’s desire to deflect attention away from the controversy surrounding the Conservatives’ fundraising.
In early March, RBS chief executive Stephen Hester supported a share sell-off: “The faster the government starts selling its stake the better for everyone,” he told the British Chambers of Commerce.
Abu Dhabi has a history of investing in British banks. In 2008, it invested £1.2 billion in Barclays, when it needed capital but was desperately refusing money from the treasury.
Subsequently, Abu Dhabi has sold most of this stake for a profit.
