Fears for RBS deal with Blackstone

A £1.4BN pound deal between Royal Bank of Scotland and Blackstone to rid the bank of some of its troubled property loans may fail, robbing the industry of a template for similar transactions, sources said.

By The Newsroom

Published 4th Oct 2011, 10:22 BST

The deal, codenamed Project Isobel, required debt funding from third parties of about 60 per cent and was part of a move by RBS to reduce its estimated £80bn property exposure, after its government bailout during the credit crisis.

“There are talks to try and save the deal with RBS providing the debt funding themselves. They should know in the next few days whether they can do that and are hopeful a deal can be done despite some entrenched and emotional positions,” one source said. Blackstone was unable to arrange debt funding from banks including Goldman Sachs, Citi and HSBC for the deal on terms that would make it attractive, the source said.

“This deal has blown up because they (Blackstone) couldn’t line up the debt given everything that is going on with the global economy at the moment,” a second source added.

HSBC