RBS has moved closer to tidying up the legacy of its role in the disastrous takeover of ABN Amro after a deal involving a Saudi bank it has a stake in, which will release capital for the group. The taxpayer-owned giant said the completion of the merger between Alawwal bank and Saudi British Bank will make it easier to exit its investment in Alawwal.
RBS acquired its interest in the firm after leading the £49 billion takeover of Holland’s ABN Amro in 2007 under discredited former chief executive Fred Goodwin. The takeover of the Dutch group left RBS saddled with massive debts. It received a £45bn bail out from the UK government the following year.
RBS will recognise a £0.7 billion gain as a result of the merger between the Saudi operations, which will allow it to reduce its risk weighted assets by £4.7bn. This will boost its balance sheet strength as measured by the Common Equity Tier 1 capital ratio.
Welcoming news of the completion of the deal, Royal Bank’s chief executive Ross McEwan said: “"We are pleased that this merger has now concluded; it will help facilitate the future exit of our shareholding as we continue to focus on our key target markets. The release of capital will also have a positive and material financial impact for RBS."
The group has been left with a 4.1 per cent holding in Saudi British Bank.
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