ROYAL BANK OF SCOTLAND:ULSTER BANK parent Royal Bank of Scotland has clinched the £2 billion sale of a majority stake in its WorldPay arm to a private equity duo, the latest step in its recovery plan following a humiliating taxpayer bailout in 2008.
On the day it posted higher quarterly results, RBS said it would sell an 80 per cent stake in its Global Merchant Services business, which runs the WorldPay payment processing company, to Advent International and Bain Capital for an enterprise value of up to £2.03 billion (€2.4 billion).
Advent and Bain have been in exclusive talks to buy WorldPay since late July, and analysts had given a price tag of between £2-2.5 billion for WorldPay.
RBS chief executive Stephen Hester has embarked on a wide-ranging asset-sale programme after the bank, 83 per cent state-owned, was ordered last year by European regulators to sell a string of assets as a price for its state bailout.
Earlier this week, it sealed the sale of over 300 UK branches to Spanish rival Santander for £1.65 billion.
RBS will keep a stake of some 20 per cent in WorldPay. The sale will result in a gain of around £850 million and boost its core Tier 1 capital ratio by around 30 basis points.
The WorldPay sale came after RBS had announced earlier in the day a sharp rise in second-quarter profits on the back of a healthier loan book and a rise in its net interest margin, although bad debts in Ireland remained problematic.
Second-quarter operating profit rose 22 per cent from the previous quarter to £869 million, as impairment losses fell to £2.49 billion from £2.68 billion, reflecting a recovery in the global economy.
RBS’s core retail and commercial banking business posted higher revenues but revenues at its GBM investment banking division fell 31 per cent from the first quarter.
RBS said there had been no investment banking pick-up in July, raising concerns that if a slow May and June continued it would leave many investment banks short of 2010 expectations.
RBS had to be rescued by the British government in October 2008 after its finances were stretched by its shared acquisition of Dutch bank ABN AMRO in 2007.
The bank was propped up with £20 billion of taxpayers’ money, causing the eventual resignation of then chief executive Sir Fred Goodwin, who had presided over an aggressive acquisition policy which included the takeover of NatWest. – (Reuters)
