RBS share price rises after it sells off portfolio of Irish real estate loans

 
Jessica Morris
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RBS is moving towards a less risky business model (Source: Getty)

The Royal Bank of Scotland's (RBS) Ulster Bank today has sold off a portfolio of Irish real estate loans for £360m, as part of a drive to decrease its capital needs.

The assets were bought by a subsidiary of Cairn Homes and an affiliate of Lone Star Funds, and the sale is expected to complete by the end of this year.

It's part of RBS' drive to reduce risky assets, and is in line with bank's plan to strengthen its capital position and reduce higher risk exposures.

The sale will shave £700m off of its risk weighted asset, the minimum amount of capital a bank must to hedge against its exposure to real world risks.

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The portfolio has a carrying value of £115m on RBS' balance sheet due to losses from the housing crash in Ireland during the financial crisis.

It had booked costs of in £28m in 2014, and the sale means RBS will add £245m after associated costs to its fourth quarter results.

"The transaction ... is part of the continued reduction of assets in RBS capital resolution and is in line with the bank's plan to strengthen its capital position and reduce higher risk exposures," RBS said in a statement to the London Stock Exchange."

RBS reported total income fell to £3bn during the third quarter, down from £3.6bn a year earlier, largely due to the reduction of its investment banking division.

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