EXCLUSIVE-UPDATE 1-RBS shipping loan business under review -sources

Fri Nov 15, 2013 9:20am EST

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By Jonathan Saul

LONDON Nov 15 (Reuters) - Royal Bank of Scotland (RBS) is reviewing its shipping loan business and is expected to place billions of dollars from the portfolio in the part-nationalised group's new internal "bad bank", sources familiar with the matter said.

The industry sources said the group's shipping exposure was now being examined as part of new Chief Executive Ross McEwan's strategic review, the results of which are due in February.

RBS declined to comment.

"A big chunk will go into the bad bank and the intention there is to sell it down as quickly as possible," one source said. "They will definitely also exit a number of relationships even on performing loans. It will be a much smaller exposure for a much smaller bank. This is coming from outside of the shipping business."

The sources said that an estimated $4 billion to $5 billion of shipping loans are expected to go into the bad bank, with the total shipping portfolio now standing at an estimated $16 billion.

RBS, 81 percent owned by British taxpayers, said this month that it would create an internal "bad bank" to fence off its riskiest assets, part of a series of measures designed to heal its relationship with the government and speed its eventual privatisation.

(Additional reporting by Matt Scuffham; Editing by David Goodman)

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