French €480m debt package is next on the block for RBS

Bank to follow up sale of Project Isobel stake with French loans disposal

Royal Bank of Scotland is understood to be at an advanced stage in the sale of a package of €480m French real estate loans. Blair Lewis at RBS France is thought to be working on the deal, which ultimately falls under the direction of Steven Eighteen’s £30bn non-core business. KPMG is advising the UK bank.

The disposal will follow RBS’s successful conclusion of Project Isobel, the bank’s agreement to sell a 25% equity stake in a debt fund that holds £1.4bn of mostly UK performing loans It also sold €286m of Spanish property loans to Perella Weinberg in March.

Next RBS may consider putting together a German loan portfolio for sale if it cannot quickly resolve what one German debt buyer termed “two or three very lumpy positions” plus “a bunch of smaller positions”. These include a number of defaulted or near defaulted loans secured against German assets.

“I would have thought [RBS] would try to work out the big positions bilaterally, then sell the smallest positions,” said  the debt buyer, who added that nothing had happened on that front until now. A number of firms are said to be preparing to pitch for an advisory role, including Ernst  & Young and Lazard.

The latter advised on Project Isobel’s structuring and sale, with Berwin Leighton Paisner. Blackstone paid around £980m to asset manage the Isobel portfolio of 29 mostly performing loans, which are secured against secondary and tertiary assets.

Last month, Blackstone senior European managing director Chad Pike told the PERE Forum Europe that the flow of deals from banks offloading loans was picking up. He said the “trickle has become a stream”, RBS had cut its non-core exposure by 38% to £38.7bn  by the end of the first quarter, from an initial £62.8bn.