RBS mulls private equity spin-off

The UK lender is in discussions to divest its buyout arm, the latest effort by a major bank to adjust to leaner times by refocusing on its core operations.

Royal Bank of Scotland is in talks to spin-off its private equity division, according to sources close to the matter.

Members of the division’s 20-strong investment team, headed by Lindsey McMurray, first made a bid for independence last year, sources said. The discussions did not come to fruition, but they are now said to be active again.

RBS declined to comment on the news, which was first reported in Real Deals.

The bank’s Equity Finance team, which sits within RBS Asset Management, provides debt and equity investments to medium-sized businesses. These are financed by the Special Opportunities Fund, a £1.1 billion (€1.3 billion, $1.7 billion) vehicle it raised from external LPs in 2007. Investments are typically in the range of £20 million to £100 million.
If completed, the spin-off would echo similar moves by European banks over the last few years. Lenders have recently been under pressure to refocus on their core divisions, so as to abide by fresh regulation and deleverage their balance sheet. 

The talks come after Santander, the Spanish bank, divested part of its asset management business to Warburg Pincus last month, and Credit Suisse sold its secondaries arm to The Blackstone Group in April.