Coutts UK to be ringfenced from overseas sale

Ross McEwan ' Coutts pledge. Picture: Phil Wilkinson
Ross McEwan ' Coutts pledge. Picture: Phil Wilkinson
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ROYAL Bank of Scotland will categorically rule out a potential bid for the whole of Coutts, its wealth management arm for affluent individuals, from Italian domestic lender Intesa Sanpaolo.

Earlier this year, RBS invited offers for the international business of Coutts following a strategic review of the group by chief executive Ross McEwan.

But it said at that time, and reaffirmed yesterday, that it regarded the UK business as a strategic core asset not included in the sale process for Coutts International, being run by investment bank Goldman Sachs.

“We will definitely be keeping Coutts UK as it has strong synergies with the parent company,” an RBS spokesman said yesterday.

The comments followed a report suggesting capital-rich Intesa Sanpaolo regarded Coutts as a desirable asset, but was trying to persuade RBS and Goldman to include the UK operations as well. Coutts customers include the Queen, leading industrialists, pop stars and footballers.

A possible bid for Coutts would deploy some of the €16 billion (£12.6bn) of excess capital at Intesa, which emerged as one of the strongest eurozone lenders in the stress tests recently run on the sector by the European Central Bank.

“We are by definition a potential consolidator,” Intesa chief executive Carlo Messina was reported as saying. It is believed Messina is targeting private banks, asset managers and insurers with the Italian bank’s considerable acquisition war chest, and that the UK is a priority.

It is not thought that a refusal by RBS to consider selling Coutts UK would derail Intesa’s interest in the high-profile bank’s overseas arm.

McEwan is understood to believe the UK subsidiary offers significant synergies with RBS’s commercial banking division, which offers deposits, loans and payment services to larger, but not the largest, companies.

One insider said: “RBS is good at helping businesses get off the ground and move on to become successful businesses. But it has not been that good in the past at linking that up with the personal financial advice people behind those companies might want farther down the line.

“Coutts UK sits in the commercial division in RBS’s restructured business, and so the synergies there are strong.”

One banking analyst said: “Under [McEwan’s predecessor] Stephen Hester and Ross, RBS has got out of a lot of businesses that were an inheritance from the Fred Goodwin era and a significant diversion of management focus.

“Coutts is a great brand name that wealthy people are attracted to. But, perhaps by selling its foreign arm and keeping its UK business, RBS might get the best of both worlds.

“It would reduce its footprint overseas but keep the jewel in the crown, namely the UK.” First-round bids for Coutts International are expected by the end of this year.

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