RBS Sells $2.3 Billion Bank of China Stake

Royal Bank of Scotland confirmed on Wednesday that it had sold its 4.26 percent stake in Bank of China for 1.6 billion pounds ($2.34 billion).

Royal Bank of Scotland (RBS) said it had sold 10.8 billion H shares for HK$1.71 each.

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"The decision to sell the stake forms part of the ongoing strategic review of the group's businesses announced in October," RBS said in a statement.

"After taking account of tax and the effects of currency hedging, the impact of this disposal on the group's capital ratios is expected to be broadly neutral."

The move represents a partial retreat to its home market by RBS, which had been expected to sell the stake after the UK government took a 58 percent holding in the bank, hit hard by the credit crunch and Britain's economic slowdown.

RBS -- which still has other operations in Asia as well as significant U.S. interests such as banking group Citizens -- would be the latest overseas investor to sell a stake in a Chinese bank and would reap a sizable profit on the 4.3 percent holding, which it bought in 2005 for $1.6 billion.

"It makes sense and it will crystallize a gain. It's not a stake that has strategic importance in terms of synergies for the group," said Ian Gordon, analyst at Exane BNP Paribas in London.

"There's no necessity for holding on to the stake in Bank of China irrespective of their ambitions in the region," he added.

Swiss bank UBS last month sold a 1.5 percent stake in Bank of China, and Bank of America last week sold a 2.5 percent stake in China Construction Bank for just over $2.8 billion. Those stakes were sold at a discount of around 12 percent.

The sale will leave Singapore state investment agency Temasek as the largest foreign investor in Bank of China, with a 4.1 percent holding.

Temasek is regarded as being under less pressure to sell its stake. It (Temasek) also holds about 2.1 percent of China Construction Bank.

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