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Wed 1 Apr 2015 03:10 PM

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Dubai bank to buy $817m of UAE company loans from RBS

Commercial Bank of Dubai says the transaction is expected to be completed this month

Dubai bank to buy $817m of UAE company loans from RBS
Royal Bank of Scotland

Royal Bank of Scotland (RBS) has sold around AED3 billion ($816.8 million) of loans belonging to companies in the United Arab Emirates to Commercial Bank of Dubai (CBD), both banks said on Wednesday.

RBS is shrinking its corporate and institutional banking business in the Middle East, Africa, parts of Europe and Asia as the lender, 79-percent owned by the British government, as it refocuses on its home market.

But it is the first time a sale of RBS's corporate assets in the region has been announced.

The portfolio of loans sold to CBD were mostly to large UAE-based companies, CBD said in a statement. They held "excellent" credit profiles, it added.

The transaction was expected to be complete this month, with the bank using its own funds for the purchase, CBD added.

Over the past decade, the UAE represented fertile ground for RBS's overseas expansion as a booming economy encouraged it to make loans to large state-controlled companies such as Dubai World and Dubai Group. Both of those companies had debt troubles after the 2008 financial crisis.

RBS sold at least part of its exposure in Dubai World as the conglomerate nears a $14.6 billion debt restructuring, sources told Reuters last month.

An RBS spokeswoman declined to name the companies involved in the CBD loan sale. She said the sale formed part of the bank's previously-announced plan to exit its corporate debt and debt capital markets business in the Middle East and Africa.

RBS has already taken steps to slim down its business in the UAE. In 2010, it sold its retail business in the country to Abu Dhabi Commercial Bank.

RBS's credit exposure to Central and Eastern Europe, the Middle East, Central Asia and Africa as well as supranationals such as the World Bank, was 16.6 billion pounds ($24.5 billion) in 2014, representing 4.3 percent of its 381.3 billion pounds of credit risk assets, its annual report said.

CBD said the purchase fitted into its strategy to develop its corporate and commercial banking platform after hiring over the past year senior staff within debt capital markets, corporate advisory, equity capital markets, treasury sales and commodity finance.

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