Royal Bank of Scotland to sell Luxembourg fund manager arm

Royal Bank of Scotland is to sell its Luxembourg-based fund management arm that oversees £20bn in assets as part of a restructuring plan to focus on the UK commercial and retail banking market.

The state-backed lender said on Monday it had appointed PwC to advise on the sale of the offshore business, which serves as an independent custodian of fund assets on behalf of other companies.

One of its largest clients is the European subsidiary of the Industrial and Commercial Bank of China, the world's biggest lender by assets, according to people familiar with the situation.

RBS said the disposal was in line with its strategy to become "a smaller, more focused bank".

It comes less than two months after the lender revealed plans to retreat from investment banking in a move that will cut as many as 14,000 jobs and slash risk-weighted assets by two-thirds.

Ross McEwan, chief executive, announced the restructuring after the bank reported its seventh consecutive annual loss.

As part of the global retrenchment, RBS is pulling out of 25 of the 38 countries in which it operates.

The bank recently confirmed the sale of Coutts International to Union Bancaire Privee, although the sale to the family-owned Swiss private bank has resulted in a £200m goodwill writedown for RBS.

RBS also announced a further reduction of its stake in Citizens Financial to below 50 per cent, in a $3.7bn share sale.

The process of selling its Luxembourg-based fund management as part of its global retrenchment is "well under way", the bank said.

It is in the process of working with PwC to select a "limited number of potential buyers" who are seeking to grow and invest in the business.

The fund management business focuses on governance, ensuring that asset managers' funds are compliant with regulations, such as Ucits.

ICBC's European subsidiary launched an onshore renminbi fixed income fund last year, working with RBS' Luxembourg arm to provide governance.

RBS has been involved in the UK trustee and depository business for more than 70 years. Last year marked the bank's tenth anniversary in Luxembourg as an independent management company.

The business had a compound annual growth rate of more than 8 per cent between 2012 and 2014, with €28.5bn of assets under administration as at the end of last year.

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