RBS to raise up to $2.4bn from Bank Of China sale
Royal Bank of Scotland Group has started selling its entire 4.3% stake in Bank of China Tuesday, potentially raising up to $2.4bn (€1.8bn), people familiar with the matter told Dow Jones Newswires.
The 10.8 billion Hong Kong-listed H shares are being sold at HK$1.68-HK$1.71 each, a 7.6%-9.1% discount to their HK$1.85 closing price Tuesday.
Morgan Stanley and RBS are joint bookrunners on the sale.
RBS bought those shares in 2005 for £900m, or HK$1.14 each, according to analysts, and could thus make a profit of up to HK$6.16bn ($790m) from the sale, despite the decline in the Chinese bank's shares in the past year. Bank of China shares fell 44% in 2008 and are down 13% this year.
Earlier, Wang Zhaowen, a spokesman at Bank of China, China's second-biggest bank by assets, said the two banks will issue a joint statement shortly, without elaborating.
Any proceeds from a sale would help the UK bank, which has pledged to redeem the £5bn preference shares issued to the UK government at a coupon of 12% in the next 18 months.
RBS bought the shares in Bank of China ahead of the latter's Hong Kong initial public offering three years ago. It led a syndicate, including a foundation owned by Li Ka-shing, one of Asia's richest men, Merrill Lynch, hedge funds D.E. Shaw & Co and Och-Ziff Capital Management, and private equity firm Oaktree Capital Management, in paying a total of $3.1bn for a 10% pre-IPO stake in the Chinese lender.
The lockup period for the syndicate's shares expired December 31.
The Li Ka Shing Foundation raised $511m last week from its sale of 2 billion of its 5 billion Bank of China shares, just days after UBS sold its entire 1.33% stake in Bank of China for $808 m.
UBS kicked off the trend of Western banks selling their China bank stakes to build up their balance sheets with its Bank of China stake sale on New Year's Eve. Bank of America trimmed its China Construction Bank holding last week.
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