NAB eyes Bank of Scotland assets

By Stuart Kelly  |   2008-7-12  |     NEWSPAPER EDITION

ROYAL Bank of Scotland Group Plc is in talks to sell assets in Australia and New Zealand after losing a bidder for its United Kingdom insurance unit.

National Australia Bank Ltd, the country's biggest bank by assets, said yesterday it was in discussions to buy RBS's investment and corporate banking divisions.

RBS is under pressure to raise capital after writing down US$15.4 billion since leading the US$114-billion takeover of ABN Amro Holding NV last year. Zurich Financial Services AG pulled out of the auction on Thursday to purchase RBS's UK insurance unit.

"Zurich's withdrawal is the bigger news," said Robert Self, an analyst at Credit Suisse Group in London who has a "neutral" rating on RBS. "They were one of the favorites."

RBS wants to get about 4 billion pounds (US$7.9 billion) from disposals to raise its so-called core equity Tier 1 capital ratio to more than 6 percent by the end of the year. The bank would get about 2 billion pounds should it sell the insurance unit for 5.5 billion pounds, said Sandy Chen, a London-based analysts at Panmure Gordon & Co who rates RBS "sell."

The sale of the units RBS got in the ABN Amro acquisition to Melbourne-based National Australia could fetch as much as A$450 million (US$430 million), Wilson HTM analyst Brett Le Mesurier told Bloomberg News.

Still, there is "no certainty" that a deal will happen, National Australia said.