Royal Bank of Scotland says goodbye to Coutts business

Royal Bank of Scotland on Friday announced that it will be offloading its Coutts private banking business to Switzerland’s Union Bancaire Privée for what is rumoured to be a price of at least $600m.

RBS said in a statement the sale to UBP included relationships managed from Switzerland, Monaco, United Arab Emirates, Qatar, Singapore and Hong Kong.

RBS said the price it will sell Coutts at will be determined by the assets under management on closing, which is expected to take place in two phases - the majority of the business is expected to transfer in the fourth quarter of 2015 and the rest in the early 2016. Coutts manages assets of more than £20.2bn

The deal is expected to see UBP pay about $600m-$800m for Coutts, according to the Financial Times, which cited two people familiar with the deal.

"We gave careful consideration to identifying a buyer with the capability to take on this business in order to minimise the impact on clients and staff. We believe that in UBP we have found a good long term owner for this business,” said the bank.

RBS said that it anticipates receiving a premium from the sale, with the resulting capital benefit expected for the bank to be modest after writing off goodwill related to the business and taking into account anticipated exit and restructuring costs.

"There will be no interruption of service for clients of Coutts or Adam & Company and we remain committed to improving all aspects of our market leading businesses,” said RBS, who asked Goldman Sachs to advise on the deal.

The latest disposal comes after last week’s move by the UK listed bank to reduce its holding in Citizens Financial in the US. Friday’s news reiterated group strategy to divest before 2016.

"Last year we set out a clear strategy to create a truly UK-focused bank. This announcement is another important step in that process. Following an extensive review, it was clear that the bank we are building would not be the most appropriate owner of the business being sold,” noted RBS.

"The transaction is subject to regulatory approvals," the bank added.

Meanwhile, analysts at UBS cut their estimates for 2015 and 2016 following the group's full year results, reflecting a more conservative view of the pace revenue decline in the investment bank relative to cost cutting.

It noted that the implication of RBS's shrinkage as it sells off various businesses would mean that it will have a lower level of earnings power than previously thought, but, in time, "the share count could be considerably lower as well which would ultimately point to a share price meaningfully ahead of the current level."

At 0825 GMT, RBS shares were off 0.6% at 347p.