The state-backed Royal Bank of Scotland (RBS) has struck a deal to sell the offshore operations of its Lombard leasing unit ahead of the new regime that will effectively break up Britain’s biggest lenders.
Sky News has learnt that RBS agreed to dispose of the Channel Islands operations last week for about £150m.
The buyers are Investec and Shawbrook, the specialist business lenders, which have agreed to divide the Jersey and Guernsey assets between them.
Investec will also take on the Lombard loans in the Isle of Man and Gibraltar, according to a source close to the deal.
Although small in scale, the disposal provides a further indication of how new ring-fencing rules – which come into force next year – are forcing major banks to reorganise their businesses.
The offshore Lombard activities were prohibited from being housed within RBS’s new ring-fenced bank, while it was not viable for them to sit in its non-ring-fenced unit, according to insiders.
The auction, which launched in the autumn, was handled by advisers at KPMG and followed RBS’s decision to close the Lombard unit in Gibraltar, Guernsey and Jersey to new business.
Lombard Finance is one of Britain’s biggest asset finance providers, lending £6bn in 2015 against assets such as vehicles, manufacturing plant and technology.
The new ring-fencing regime was conceived in 2011 by a commission led by Sir John Vickers, and has cost the five major banks – Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK – billions of pounds to implement.
Ring-fencing is intended to protect taxpayers during a future financial crisis by enabling the investment banking divisions of major lenders to fail without needing state support.
For RBS, which remains more than 70%-owned by British taxpayers nearly a decade after it was bailed out, the sale of the Lombard offshore unit represents another streamlining move.
Last autumn, RBS sold its stake in Euroclear, the financial markets infrastructure group, to the owner of the New York Stock Exchange.
It was the latest in a lengthy tail of assets disposed of by the bank since it was rescued by taxpayers in 2008.
RBS was forced to sell Worldpay, the payments processing business, for what critics have since dubbed a bargain basement price.
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Its US bank, Citizens, a stake in Bank of China and a big commodities trading operation are also among the profitable assets it was obliged to offload, either for state aid reasons or because its parlous finances required it.
RBS declined to comment on Wednesday on the Lombard Channel Islands sale.