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RBS Might Transfer Assets to Netherlands in No-Deal Brexit

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The Royal Bank of Scotland is planning to shift assets to the Netherlands in March 2019 in case of a no-deal Brexit. The bank has put forth request for transfer of assets worth about £6 billion and £7 billion of liabilities to its Dutch subsidiary — NatWest Markets N.V.

The move is expected to impact nearly 30% of customers in NatWest markets’, who are located in the European Economic Area.

In case a deal is struck between Britain and European Union (“EU”), the transfer of assets would be a slower process and be “subject to further political developments”, per the bank.

Notably, RBS has picked Amsterdam as its EU hub. However, it will also attend clients out of Dublin, Frankfurt, Madrid, Milan, Paris and Stockholm.

Similar Moves by Other Banks

Deutsche Bank (DB - Free Report) is planning to transfer a large chunk of assets from its London base to Frankfurt headquarters post Brexit. Further, Citigroup (C - Free Report) might make 150 new positions in the EU. Also, the bank has plans to convert its existing subsidiary in Frankfurt into an investment firm.

Goldman Sachs (GS - Free Report) has begun moving operation from London to Frankfurt and other European cities. UBS Group is yet to finalize plans. However, it expects to move about 250 jobs, down from previous forecast of 1000. Also, the bank is mulling over Frankfurt, Madrid and Amsterdam as its potential EU locations.

Our Take

Royal Bank of Scotland’s diversified business model and commitment to improve financials are likely to support its overall growth in the near term. Moreover, resumption of dividend payment and special dividend announcement reflect its improving financial position, and is expected to act as a tailwind. However, its involvement in legal issues remains a concern.

Shares of RBS have declined around 17.1% on the NYSE over the past three months compared with the fall of 4.3% recorded by the industry.

RBS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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