RBS to sell further North American loan portfolio to Mizuho

The Royal Bank of Scotland has agreed to sell another portfolio of corporate loans in North America to the Mizuho Financial Group of Japan.

The portfolio consists of $5.6bn in commitments, or the amount in loans that RBS has agreed to extend, of which about $500m has already been used by the borrowing companies.

RBS said it would receive about $500m in cash from the sale, and that it would result in a loss of about $30m.

The agreement, which is the second between the two banks in three months, is part of moves by the state-backed lender to retrench from global markets and focus on the UK.

The announcement comes in the same week that RBS is due to unveil its first-quarter results. Analysts at Credit Suisse expect the bank to post a pre-tax loss of £0.2bn, due to litigation charges and restructuring costs.

In February RBS said it would also sell a portfolio of US and Canadian loan commitments to the Japanese bank, marking Mizuho's latest push to expand lending to non-Japanese blue-chips.

The transaction announced on Monday is expected to be substantially complete by the end of the third quarter this year.

The agreement is part of an overseas push by Japanese lenders as they grapple with shrinking loan margins at home and capitalise on the retreat of European rivals.

Mizuho, Japan's second-largest lender by assets, had until this year lagged behind Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, the country's two other megabanks in their international expansion.

Together with the announced sale to Mizuho in February, approximately two-thirds of RBS's North American corporate loan portfolio and associated commitments identified for exit have now been disposed of.

The bank recently announced plans to dispose of its Luxembourg-based fund management arm, which oversees £20bn in assets.

It comes after the lender confirmed the sale of Coutts International in March to Union Bancaire Privee. This resulted in a £200m goodwill writedown for RBS.

The bank also that month increased the value of shares it is selling in Citizens Financial, the US retail bank, to as much as $3.7bn on the back of strong investor demand.

Additional reporting by Emma Dunkley in London

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