Shares in Royal Bank of Scotland plunged by nearly five per cent after the state-owned institution updated the market on plans to shift up to £13 billion of assets into a Netherlands subsidiary in the event of the UK crashing out of the EU without a deal.
The bank, which is 62.4 per cent owned by UK taxpayers, told the City it has begun the process of seeking legal consent at the Court of Session to ensure it can serve customers incorporated or located in the European Economic Area (EEA) through its Dutch subsidiary. The process would see NatWest Markets NV, currently a subsidiary of The Royal Bank of Scotland Group, become a subsidiary of NatWest Markets – the investment banking arm of the RBS Group - in 2019.
The move comes after Royal Bank announced it had made a £100 million provision to reflect Brexit risk as it unveiled its third quarter results in October. Chief executive Ross McEwan had previously warned a no-deal Brexit could tip the UK economy into recession.
The bank, which has seen Brexit uncertainty weigh heavily on its share price over the last year, said: “The Scheme is designed with two phases to provide flexibility, so we can be responsive to any political changes in relation to the UK leaving the European Union, such as any agreed transitional period.”
The bank added: “In a scenario where there is an expectation of an immediate loss of access to the European Single Market up to circa £6bn equivalent of third party assets and up to circa £7bn equivalent of third party liabilities are expected to transfer from NatWest Markets Plc to NatWest Markets NV. During a transition period, the move of non-UK EEA customers to NatWest Markets NV may be more gradual and subject to further political developments.”
Shares in Royal Bank of Scotland closed down 10p, or 4.5%, at 212p. Shares were trading at 274.7p one year ago.
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