RBS only sells part of its trading operations

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The Independent Online

While Barclays thrived, Royal Bank of Scotland continued to hit hurdles, finally managing to sell only part of its RBS Sempra commodities business.

The bank has managed to offload the European energy assets and its metals and oils businesses in Europe and Asia to the US investment bank JP Morgan for $1.7bn (£1.1bn).

However, the deal excludes the more valuable North American pieces of Connecticut-based RBS Sempra Commodities, which trades natural gas, petroleum, metals and other commodities. RBS will take just under half the proceeds after "partner distributions".

RBS had originally been hoping to sell the entire operation for as much as $4bn, but JP fought shy as a result of the introduction of the "Volcker rule" by US President Barack Obama. It was brought in to stop banks from running risky trading businesses. RBS said it is now "exploring other ownership options" for the remaining business, along with its joint venture partner, the American company Sempra Energy.

Bruce Van Saun, RBS group finance director, said: "We are pleased to have expeditiously reached agreement on the divestment of these unique assets. We believe we have struck a fair price and contract with JP Morgan." Mr Van Saun said the remaining businesses "remain of high value and are performing well". However, in future the results of the businesses will be included as part of RBS's "non-core" operations.

The bank was ordered to sell the operation by the European Commission as the consequence of the massive injection of state funds that kept it afloat during the financial crisis. The taxpayer has an economic interest in RBS of 84 per cent.

RBS also has to sell its insurance businesses, including Direct Line and Churchill, together with 300 branches under the Williams & Glyn's brand which are a target for sometime ally Banco Santander. The latter wants to add them to its UK operations, where they would significantly strengthen its hand in business banking. A partial flotation of Santander's UK businesses could help to fund a deal.

RBS is expected to pay bonuses of between £1.3bn and £1.5bn to its bankers in a package that has to be approved by UK Financial Investments, the government body that oversees the state's investment in the banking sector.

It is likely to pay close attention to Barclays' bonus policy, which cut the overall ratio of compensation against income cut to 38 per cent from 44 per cent, with nearly half the payments being deferred.

RBS is set to unveil what is likely to be a contentious set of results on Thursday next week, when final details of the packages should be revealed.

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