State-owned Royal Bank of Scotland (RBS) is selling off its Lombard leasing operations as part of a ring-fencing process to protect taxpayers from further losses.
Lombard, one the UK’s biggest vehicles and machinery leasing companies, has been sold to Investec and Shawbrook for a figure of £150m, according to a report by Sky News.
Lombard, which is based offshore in the Channel Islands, has fallen victim to rules brought in following a 2011 banking review by Sir John Vickers.
Streamlining for sale
Britain’s biggest banks were told they must put offshore and investment banking arms into separate subsidiaries, outside the main banking operations.
The aim of the new rules – following on from the 2008 banking crisis – is that if the subsidiaries were to fail, it would not affect the financial viability of the banks themselves.
RBS’s sale of Lombard is also part of a further streamlining of the bank prior to a further sell-off of the UK government’s stake in the business.
The government plans to sell £15bn RBS shares by 2023. In 2015 it sold £2.1bn shares at 330p a share, substantially less than the 502p it paid when it bailed out the bank.