Royal Bank of Scotland Group plc said the completion of the merger of Alawwal Bank and Saudi British Bank would release capital that will have a positive and material financial impact on RBS.
RBS said that within its NatWest Markets franchise it would recognise an income gain on disposal of the Alawwal bank stake for shares received in Saudi British Bank of £400 million and a reduction in risk weighted assets of £4.7 billion.
RBS also said the deal would extinguish legacy liabilities of £300 million.
RBS had been trying for years to sell its stake in Alawwal.
“The completion of the merger impacts RBS and its subsidiaries NatWest Markets N.V. (NWM NV) and NatWest Markets Plc (NWM Plc),” said RBS in a stock exchange statement.
“RBS, through its Dutch subsidiary NWM NV, held an aggregate 40% shareholding in Alawwal bank on behalf of itself, Stichting Administratiekantoor Beheer Financiële Instellingen (NLFI) and Banco Santander S.A. which dated back to RBS’s acquisition of ABN AMRO in 2007.
“The economic interest of RBS was equivalent to a 15.3% shareholding in Alawwal bank.
“As a result of the merger NWM NV received an aggregate shareholding of 10.8% in SABB, representing the total interests of the consortium.
“NWM NV then immediately transferred the RBS economic interest of 4.1% in SABB to NWM Plc, and the balance of the shares separately to NLFI and Banco Santander S.A., as part of an unwind of the consortium arrangements.”
RBS CEO Ross McEwan said: “We are pleased that this merger has now concluded; it will help facilitate the future exit of our shareholding as we continue to focus on our key target markets.
“The release of capital will also have a positive and material financial impact for RBS.”