Royal Bank of Scotland has increased the drive to sell down its leveraged loan portfolio after holding talks with at least three private equity firms over a plan to divest debt worth billions. This comes just days after the British bank revealed it had reduced its loan portfolio by just under £5bn so far this year.
A source close to the bank said it has held negotiations with Apollo, GSO Capital and Blackstone over selling the debt that backed private equity transactions, at a discount to the original value. The source declined to put an exact value on the amount of loans to be sold, but said the speculated $8bn (£4.2bn) "looks a bit high", before adding that the talks were more "good news for the group". RBS declined to comment.
This comes days after Sir Fred Goodwin, RBS's chief executive, said at the group's interim results that it had reduced its leveraged finance portfolio from £14.5bn at the end of last year to £10.8bn at the end of June, mainly "through the sale of a number of holdings". The following month, the bank sold another £1.25bn of leveraged loans. "These leveraged disposals have been at better prices than we had assumed in April," Sir Fred added.
There was little other good news at the interims as RBS posted its first ever loss, totalling £691m, after £5.93bn of write-downs in the wake of the credit crunch. Sir Fred said he was "very disappointed and numbed" by the results.
Sir Fred's role at the bank has been under scrutiny this year since the full impact of the rights issue was revealed, but he has vowed to steer the group through the tough conditions.
However, the losses were better than expected – some had predicted up to £1.7bn – predominantly because it made £812m on the value of its own debt.