Saturday, January 7, 2012

Bank of China, Mizuho eye RBS bank assets: sources

(Reuters) - Bank of China (601988.SS) and Japan's Mizuho Financial 8411.T. are among the banks eyeing parts of the Royal Bank of Scotland (RBS.L), sources told Reuters on Friday, as the process begins to trim the investment banking arm of the government owned UK bank.


RBS hired Lazard (LAZ.N) to advise it on the process, Reuters reported earlier this week, which will include exploring options to both shrink the size of the division and sell off parts.

RBS is seeking buyers for its cash equities, equity capital markets and mergers and acquisition business globally, one source said. Both sources cautioned that the process was in its very early stages and would take a while to play out.

Bank of China (3988.HK), Mizuho and RBS declined to comment.

Managing directors in RBS's corporate broking unit Hoare Govett are considering teaming up with UK stockbroker Oriel Securities to lead a buyout of the division, Bloomberg reported on Friday. Oriel declined to comment.

Like other Chinese lenders, Bank of China, which was once partly owned by RBS, has been looking to expand its earning capabilities through fee and commission income.

The bank has a Hong Kong-based investment arm, BOC International. In the third quarter of 2011, its fee income grew 22 percent to 15.8 billion yuan ($2.4 billion).

RBS sold its entire 4.3 percent stake in Bank of China for $2.3 billion in 2009. RBS dumped the stake after it took a government bailout in October 2008, falling victim to the global financial crisis.

It's massive purchase of Dutch bank ABN Amro is credited with overstretching RBS and prompting its near collapse after the fall of Lehman Brothers.

The British government owns 83 percent of RBS.

China Construction Bank (601939.SS), after studying the RBS auction, has decided not to take part, according to one source with direct knowledge.

The source said CCB is more interesting in the corporate lending business than cash equities and the other parts being sold.

Mizuho Financial, whose brokerage arm is Mizuho Securities, is currently implementing a reorganization that would include merging its core units, Mizuho Bank and Mizuho Corporate Bank.

RBS was ranked No. 12 in the Asia Pacific M&A league tables, last year, excluding Japan, and No. 18 in equity underwriting, according to Thomson Reuters data. The bank was ranked tenth in Asian G3 Currency Bonds (ex-Japan, ex-Australia) the data show.

reuters.com

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