RBS has asked KPMG to launch an auction of Lombard’s offshore business which bankers believe could fetch in the region of £200m, Sky News has reported.
This comes as new regulations which reportedly will “break up” the biggest British lenders from 2019 which prompted RBS to take action on the Channel Islands operations of the asset finance group.
This sale process follows RBS’ decision to close the Gibraltar, Guernsey and Jersey units of Lombard, with sources telling Sky News that the inability to house Lombard’s offshore balance sheet within RBS’s ring-fenced bank led to the final decision.
Lombard Finance lent £6bn in 2015 against assets such as vehicles, manufacturing plants and technology.
This auction represents one of the first tangible examples of a major British bank deciding to sell a substantial business because of the ring-fencing rules which will create a firewall between lenders’ retail and investment banking units from 2019.
Sky News explains ring-fencing is intended to protect taxpayers during a future financial crisis by enabling the investment banking divisions of major lenders to fail without needing state support.
