RBS Talks Sale With Abu Dhabi Royals

Sources say ruling family could buy stake in bank

The Abu Dhabi ruling family is in talks to purchase a stake in the government-owned Royal Bank of Scotland (RBS), according to sources close to both sides of the potential deal.

Reuters reported Tuesday that although the share price is still far below what the British government paid in its bailout of the bank, talks were under way between the government and Abu Dhabi for the latter to purchase as much as a third of the ailing bank.

The BBC had reported Monday that Abu Dhabi has the largest sovereign wealth fund in the world, valued by The Economist at 550 billion pounds ($875 billion). According to the Reuters sources, however, the fund is not engaged in the discussions.

The move is expected to draw criticism, since a sale while the RBS share price is still so low would result in a substantial loss for the British taxpayer—already in the red for the sale of Northern Rock to Virgin Money. However, the government is said to want to avoid additional contention over pay and bonus rates at the bank, which it could do if it was no longer solely responsible for making such decisions. It hopes to reach some agreement before Christmas.

A senior banker was cited as the source of information that the Abu Dhabi royals were being advised on the matter by an individual. Previously, the royal family has consulted the British banker Amanda Staveley, who in 2008 was involved in the family's investment of 3.5 billion pounds in Barclays. Abu Dhabi racked up a gain of about 3 billion pounds on the Barclays transaction.

An unnamed British Treasury official was quoted in the report saying, "We will start returning the stake to the private sector when it offers value for money to the taxpayer. The share price is not near that now."

The Abu Dhabi ruling family is in talks to purchase a stake in the government-owned Royal Bank of Scotland (RBS), according to sources close to both sides of the potential deal.

Reuters reported Tuesday that although the share price is still far below what the British government paid in its bailout of the bank, talks were underway between the government and Abu Dhabi for the latter to purchase as much as a third of the ailing bank.

The BBC had reported Monday that Abu Dhabi has the largest sovereign wealth fund in the world, valued by The Economist at 550 billion pounds ($875 billion). According to the Reuters sources, however, the fund is not engaged in the discussions. Instead the matter is under consideration by the royal family of Abu Dhabi.

The move is expected to draw criticism, since a sale while the RBS share price is still so low would result in a substantial loss for the British taxpayer—already in the red for the sale of Northern Rock to Virgin Money. However, the government is said to want to avoid additional contention over pay and bonus rates at the bank, which it could do if it is no longer solely responsible for making such decisions. Further, it hopes to reach some agreement before Christmas.

A senior banker was cited as the source of information that the Abu Dhabi royals were being advised on the matter by an individual. Previously, however, the royal family has consulted British banker Amanda Staveley, who in 2008 was involved in the family's investment of 3.5 billion pounds in Barclays. Abu Dhabi racked up a gain of about 3 billion pounds on the Barclays transaction.

An unnamed British Treasury official was quoted in the report saying, "We will start returning the stake to the private sector when it offers value for money to the taxpayer. The share price is not near that now."

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