RBS reduces CRE loans ahead of schedule

Royal Bank of Scotland’s ‘bad bank’ has disposed of £4bn of assets, about half of them non-performing commercial real estate loans.

RBS Capital Resolution (RCR) said it had reduced its assets by 25% to £11.1bn in the first quarter of the year and it would dispose of around half the remaining total by the end of 2015 – a year earlier than planned.

Of the £11.1bn of loans left about £4.6bn were made on commercial real estate. Most of these loans were made in the UK, £2.3bn, through RBS’s Ulster Bank in Ireland, £1.1bn, and in Spain, £0.5bn.

The total value of gross loans in commercial real estate now on RCR’s books was £8.4bn with a total provision of £5.1bn.

RCR said the recent disposal activity was across all four of its loan divisions – Corporate, Real Estate Finance, Ulster Bank and Markets. Its disposal schedule had benefited from a combination of market liquidity and demand for real estate which had resulted in impairment releases of £109m.

Other operating income of £117m was primarily driven by disposal gains and fair value adjustments. RCR made an operating profit for the quarter of £181m.