RBS sells card processing unit for £1.9bn

6th Aug 2010 14:11

Royal Bank of Scotland announced the sale of a controlling 80.01% stake in its credit card payment processing business to a private equity consortium for up to £1.9bn.The sale of its Global Merchant Services (GMS) business to a consortium of Advent International and Bain Capital is expected to generate a £850m book gain. Under the terms of the deal, about £1.7bn will be paid in cash, while up to £200m is receivable in the future if the returns realised by the consortium exceed certain thresholds.RBS will hold a minority stake in the new GMS group of 19.99% and will continue to promote the GMS product suite as part of its offering to customers. The lender said Advent International and Bain Capital have committed to making substantial investments in the technology platform and the product offering. The sale is expected to complete in the fourth quarter of 2010 and is subject to certain conditions including approval by the European Commission, US anti-trust authorities and other regulators. Bruce Van Saun, RBS finance director, said: "The sale of GMS is another significant milestone in the group's restructuring programme. GMS is an excellent business. The transaction will be good for both staff and customers as the business implements its ambitious expansion plans."This morning, RBS said it is "on track" to achieve goals set out in its five-year recovery plan after posting a pre-tax profit of £1.16bn for the second quarter of 2010. The bank, which lost £21m in the first quarter and produced a small profit of £59m this time last year, made £1.14bn for the half-year compared with a paltry £15m in the first six months of 2009.