RBS sells part of US commodities arm for $760m

ROYAL Bank of Scotland has sold part of its stake in United States-based commodities business RBS Sempra to investment bank JP Morgan Chase for $760 million (£483m).

RBS and its joint venture partner in the business, Sempra Energy, valued the sale at $1.7 billion (1.08bn). US-based Sempra said its share of the sale proceeds was expected to be about $940m.

The sale of the global oil, metals and European power and gas assets to JP Morgan represents about 50 per cent of the business.

Sempra is thought to be in talks to buy RBS's stake in the remaining North American natural gas and power businesses and has retained JP Morgan as its financial adviser to "review potential alternatives".

JP Morgan had initially considered buying the whole joint venture for about $4bn, but dropped the plan because of the large overlap between RBS Sempra's business in the US and its own current trading activity, as well as concerns following US president Barack Obama's call for limits on proprietary trading by banks.

The sale was triggered by a European Commission state-aid ruling late last year ordering RBS to divest its stake in the commodities firm. It acquired its 51 per cent stake in Stamford-based Sempra in July 2007 for $1.35bn.

Traders at RBS Sempra welcomed the news after months of uncertainty that prompted a string of staff departures. One said the deal "takes us into a different league".

RBS said the price paid represented a premium of $468m to the estimated tangible net assets for the group and that it expected to report a "small gain" on the sale. The bank said proceeds would be used to repay short-term borrowings.

For JP Morgan, the deal doubles the number of clients in its global commodities business run by Blythe Masters. Snapping up a large part of RBS Sempra will boost its aim of taking on the top three commodities firms, Goldman Sachs, Morgan Stanley and Barclays.

RBS shares were up 5.25 per cent to 33.3p.