RBS may sell £1bn of Spanish property loans

Royal Bank of Scotland is considering selling a £1 billion Spanish property loan portfolio after hiring Morgan Stanley to advise on its options.

The Spanish commercial property mortgages add to a 3bn portfolio of UK property loans also on the block. Private equity firms and specialised investors looking to pick up the assets at a discount would be the likely buyers, sources yesterday said.

Part-nationalised RBS is attempting to shrink its "non-core" division and has said it may sell assets.

There were some 44bn of property assets in the division at the end of June, down from 63bn at the end of 2008. At the end of last year, 42 per cent of the non-core portfolio assets were in Britain, and a quarter were in mainland Europe.

At least three potential bidders - Goldman Sachs, distressed debt fund Lone Star and private equity group Blackstone - were said to be eying the 3bn British portfolio in early October, although RBS said at the time it had not decided whether to sell or not.

The Spanish portfolio is mainly made up of debt secured on commercial properties. RBS was a big lender to Spanish developers in the run-up to the financial crisis, and has ended up as a shareholder in property company Inmobiliaria Colonial after a debt-for-equity swap.

The potential disposals are part of RBS's five-year plan to clear 250bn of non-core assets off its balance sheet.