LOOMING sell-off activity at Royal Bank of Scotland gained momentum yesterday as Emirates NBD broke cover with its interest in buying RBS's shared stake in Saudi Hollandi Bank.
Meanwhile, it is understood that private equity giants Apax Partners and Kohlberg Kravis Roberts are back in the race to acquire the Royal's Direct Line insurance business.
The private equity players are believed to be talking to potential trade b
uyers of Direct Line, such as Zurich Financial Services and Assicurazioni Generali, to try and link up on a deal.
Emirates NBD, the Gulf's biggest lender, said it was interested in buying the 40 per cent stake in Saudi Hollandi bank to tap retail business in the world's largest oil exporter.
The stake is joint-owned with Santander of Spain and Fortis of Belgium, and was acquired when the RBS consortium bought ABN Amro last autumn.
Rick Pudner, the Dubai-based Emirates NBD's chief executive, said: "We are interested in the stake. It's obviously an interesting possibility to expand in the kingdom." However, Pudner said no talks with RBS had yet taken place, adding: "In terms of retail franchise, it's an exciting market because of the wealth and the number of people."
A spokesman for RBS said: "We have always said Saudi Hollandi is a shared asset that would be managed for value with a view to a possible sale."
Analysts say the combined holding is worth about $1.72 billion (£868 million).
It is thought NBD might face competition for its Saudi assets from National Bank of Kuwait and Standard Chartered. The Kuwaiti lender's chief executive officer, Ibrahim Dabdoub, said two years ago that his bank and Standard were interested in acquiring the holding if ABN decided to sell Saudi Hollandi.
Shares of Saudi Hollandi are down 2.8 per cent this year to Saturday's close.
It comes as speculation mounts that private equity firms Apax and KKR are stepping up their efforts to get a slice of the multi-billion-pound auction of RBS's insurance business.
Banking sources say there are about six trade suitors for Direct Line. Apart from Zurich Financial and Assicurazioni, the possible buyers are also reported to include American International Group and Ping An, the Chinese insurance giant.
Ping An has been linked recently with an attempt to buy into Prudential's fast-growing Asian business and that is seen as limiting its room for financial manoeuvre on Direct Line if a deal can be agreed with the Pru.
RBS originally shut private equity out of first-round bids because of concerns that the firms' financing would not be assured in the current credit crunch.
However, analysts say this fear might be allayed if they were raising less money by partnering a trade buyer.
It is thought private equity would hope to pick up assets sold for competition reasons, or because of operational overlap.
The full article contains 488 words and appears in The Scotsman newspaper.
