Royal Bank of Scotland (LON: RBS) is preparing to sell a property portfolio of more than 3 Billion GDP to determine whether or not the market is hungry for assets which have been considered toxic to investors since the financial crisis.
If the sale goes well, it will likely be a precursor for the sale of an additional 20 GBP worth of property loans that are likely to be sold by RBS during the next five years. The loans are part of a 258 billion GDP portfolio allocated to a “non-core” division at the end of 2008 to be sold or wound-down as CEO Stephen Hester sought to rebuild RBS on a smaller capital base.
RBS, which is currently 83% state-owned, hopes to run-off 40-50 billion GBP of its real estate loans as they mature. About 13.5 billion has already been divested from and the rest will be sold.
The 3 billion portfolio for sale will likely receive a loan to value ratio of 80%-90% will determine whether or not the market is interested in the 49.5 billion GBP worth of property loans which are on the books of the non-core division of Royal Bank of Scotland (LON: RBS).
RBS has already exited 22 from 22 of its businesses and another three to four sales will likely occur in the coming weeks. RBS has also existed loans in areas such as corporate lending where there are a number of alternative lenders in business. A spokeswoman for RBS said, “We are making good progress against our targets to reduce our balance sheet.”
