Morgan Stanley Advises RBS to Offload Majority Stake in Ulster Bank

Shares in Royal Bank of Scotland were trading 1.52% lower this morning following news that investment bank Morgan Stanley has advised RBS to offload a majority stake in its Irish unit, Ulster Bank.

Ireland's Sunday Business Post reported that an Ulster Bank stake-sale announcement could be made next week and could trigger a formal bidding process.

RBS on 25 July said that attracting private equity firms to infuse cash into its Irish arm was one of several options it was considering as part of a restructuring of Ulster Bank, the third-largest in the Republic of Ireland. It had commissioned Morgan Stanley to advise it on the Ulster Bank situation.

RBS was examining the opportunities it had for Ulster and will be in a position to discuss them "probably in the next two or three months", RBS chief executive Ross McEwan said on Friday, after the lender reported a sharp rise in profit for the first half of 2014.

The Irish Examiner said last week that RBS was considering selling Ulster's operations in the Irish Republic to a private equity player. A likely deal is not expected to touch the current management team under chief executive Jim Brown.

The state-backed British lender hired Morgan Stanley earlier in the year to advise it on potential merger options for Ulster Bank.

The UK government is eyeing a reduction in its RBS stake. But Chancellor George Osborne is unlikely to move before the general election in 2015 for fear of a botched sell-off of some of the government's RBS shares.