Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) has concluded agreements to sell at least $600 million (487 million pounds) worth of shipping loans from its portfolio as part of efforts to exit the sector, sources with direct knowledge of the deal told Reuters on Friday.
RBS, which is more than 70 percent state owned, is in the middle of a restructuring, which includes asset sales, job cuts and tackling multi-billion dollar charges to settle litigation and pay regulatory fines for past misconduct.
The sources said Japanese financial services firm Orix Corp (>> ORIX CORPORATION) has agreed to buy $290 million worth of shipping loans from RBS, while separately Germany's Berenberg Bank would purchase around $300 million of loans.
Spokespeople for RBS, Orix and Berenberg all declined to comment.
Reuters reported last month the British bank was close to selling at least $600 million worth of shipping loans to financial institutions, including Orix and Berenberg.
Most of the loans Orix is buying from RBS are investment grade and made to Greek borrowers, said the sources, who were not authorised to discuss the matter publicly.
RBS initially tried to sell its entire Greek shipping business, which was valued at $3 billion at the time and held talks with Orix and Berenberg.
Although 90 percent of world trade is transported by sea, the shipping industry is stuck in its deepest slump on record, as international trade slows and freight rates fall in a market with too many vessels.
European banks, major lenders to the shipping industry, have been reducing exposure to the sector partly because of the tough market conditions, but also to meet stricter banking rules.
Sources said Orix saw the deal as an opportunity to buy cheaply loans made to healthy borrowers. They also said that the Japanese company was already in similar talks with other lenders to the shipping sector.
RBS, which has had eight years of annual losses, was rescued with a more than 45 billion pound ($55.27 billion) bailout at the height of the financial crisis.
The Edinburgh-based bank announced last September it was winding down its global shipping business after earlier sales efforts were not successful.
($1 = 0.8141 pounds)
(Reporting by Taiga Uranaka in Tokyo, Jonathan Saul and Andrew MacAskill in London, Editing by Himani Sarkar and Jane Merriman)