LONDON: The Royal Bank of Scotland has begun winding down its global shipping finance business, it said on Tuesday, ending efforts to sell it amid a worsening downturn across the freight industry.
Chief Executive Ross McEwan is battling to complete a restructuring, which includes asset sales and thousands of job cuts, amid a low-interest rate environment that makes finding profitable new business tough.
"In line with the bank's strategy to create a simpler, stronger, and more sustainable bank, better aligned to the needs of our customers in the UK and Western Europe, we are commencing the wind down of our shipping business," an RBS spokesperson said.
"We understand how difficult this will be for our staff and we will be offering support to those affected, including redeploying people in to other positions where we can."
Shipping industry sources have told Reuters that RBS had been trying to sell its Greek shipping business, valued at around $3 billion, for over a year.
RBS's overall shipping exposure was 6.765 billion pounds ($8.77 billion) at end June - little changed from the end of 2015, RBS data showed.
Nearly 6 billion pounds of that was managed by its Capital Resolution Group, its so-called 'bad bank'.
A source close to RBS told Reuters the bank had opted for an overall wind down as offers received for the Greek business, the most prominent part of its shipping assets, did not match the value it wanted.
The source said the bank believed an orderly wind down over the next few years until the loans reached maturity would represent the best option for shareholders rather than asset sales at distressed prices.
The source added that the bank expected to cut 20 to 25 jobs in shipping with around 10 people expected to stay on to run the business down.
Other sources have said the Greek shipping business had employed around 40 people.
Segments of the shipping industry are suffering their deepest downturn ever as international trade slows.
Around 90 percent of world trade is transported by sea. Eight years on from its 45-billion pound taxpayer-funded bailout, RBS is still facing a host of legal and regulatory problems stemming from its conduct before and during the 2008 financial crisis.
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