In the same week, the Royal Bank of Scotland (RBS) has sold its remaining 2.2% stake in Madrid-based Banco Santander Central Hispano and invested $1.6 billion in the $3.1 billion the group that is buying a 10% stake in Bank of China.
Europe’s second-largest bank has calmed some fears by selling the Santander stake to fund its new investment. RBS is taking a smaller slice of the growing China market than many thought it would. It is the largest holder in the group buy, with Merrill Lynch and Li Ka-Shing, the Hong Kong-based telecommunications tycoon, as the co-investors, and thus controls the investment. RBS Chief Executive Sir Fred Goodwin has called it a “low risk” move.
“There were investor concerns based on rumours about the size of the investment we might be contemplating in China,” Goodwin said. “We have made a very modest investment and made that investment recognising that there are some risks. We saw those risks and we have been able to obtain warranties and other protections from the vendor.”