RBS quits Dubai Group debt talks, news agency says

9th Jul 2012 17:16

Royal Bank of Scotland and two other lenders have abandoned talks on restructuring Dubai Group's $10bn debt and threatened to bring unprecedented legal action against the investment vehicle of Dubai's ruler, sources close to the matter have told Reuters.Some observers believe the above is no more than posturing so as to achieve better terms but it is believed that the lenders could scupper the restructuring of the Middle Eastern company´s debt which had seemed to be close to being signed just last week after two years of negotiations. RBS had been co-chair of the creditor committee representing banks with either little or no security tied to their cash. The other two banks are Commerzbank and South Africa´s Standard Bank. A spokeswoman from RBS has confirmed that the bank is no longer on the creditor committee but provided no further details.The three banks' main concern is the proposed 12-year debt repayment extension for unsecured creditors, because of the cost it would impose on the banks to extend cash for so long, three sources said. Dubai Group is relying on asset sales to repay its obligations and wants time for values to recover before selling, Reuters explains.Shares of RBS closed 2.08% higher today, at 205.7p.AB