RBS celebrates outcome of Saudi bank merger

Ross McEwan

RBS acquired its interest in Alawwal after leading the disastrous £49 billion takeover of Dutch bank ABN Amro in 2007 under shamed former chief executive Fred Goodwin and before its eye-watering, record-breaking £46 billion taxpayer bailout.

While the original deal left RBS saddled with massive debts, RBS said it will now recognise a £0.7bn gain as a result of the merger between the Saudi operations, which will allow it to reduce its risk weighted assets by £4.7bn.

This will boost its balance sheet strength as measured by the Common Equity Tier 1 capital ratio.

RBS, through its Dutch subsidiary NWM NV, held an aggregate 40 per cent shareholding in Alawwal bank on behalf of itself, Stichting Administratiekantoor Beheer Financiële Instellingen (“NLFI”) and Banco Santander S.A. (together the “Consortium”) which dated back to the 2007 acquisition of ABN Amro. 

The economic interest of RBS was equivalent to a 15.3 per cent shareholding in Alawwal bank.

As a result of this week’s merger, NWM NV received an aggregate shareholding of 10.8 per cent in SABB, representing the total interests of the Consortium. 

NWM NV then immediately transferred the RBS economic interest of 4.1 per cent in SABB to NWM Plc, and the balance of the shares separately to NLFI and Banco Santander S.A., as part of an unwind of the Consortium arrangements. 

NWM NV is reported as part of RBS’s NatWest Markets franchise.

NWM NV is now expected to transfer to NWM Plc ownership during the second half of 2019, subject to regulatory approvals, and will continue to be reported as part of the franchise.

Royal Bank’s chief executive Ross Mcewan said: “We are pleased that this merger has now concluded; it will help facilitate the future exit of our shareholding as we continue to focus on our key target markets. The release of capital will also have a positive and material financial impact for RBS.”