RBS To Sell GBP 3.8 Bln Finance Assets To Bank Of Tokyo-Mitsubishi

(RTTNews) - U.K.- based lender Royal Bank of Scotland Group plc (RBS.L: News ,RBS: News ) said Monday that it has signed a non-binding Memorandum of Understanding or MoU with Japan's Bank of Tokyo-Mitsubishi UFJ, Ltd. for the proposed sale of a non-core Project Finance assets. The sale price is not revealed.

According to RBS, the portfolio to be acquired comprises loans worth about GBP 3.8 billion or US$6.1 billion in aggregate and mainly consists of natural resources, power and other infrastructure assets in the UK, Europe, the Middle East and Africa or EMEA, Asia Pacific or APAC and the Middle East. The transaction is said to mark the first major sale of oil and gas financing assets since the financial crisis.
RBS and the U.K. government, which owns 84% of the lender, were in talks with Mitsubishi UFJ and RBS has been asked by the government to sell off non-core operations to pay back public funds after receiving 45.5 billion pounds of government funding during the global financial crisis. The bank has one of the world's largest project financing operations, with strength in lending to railroad, energy and other infrastructure projects in Europe, the Middle East and Africa. The Bank of Tokyo-Mitsubishi UFJ, Ltd, or BTMU, a subsidiary of Mitsubishi UFJ Financial Group, Inc. (MTU: News ) also said today that it has reached agreement with RBS on key terms for the proposed acquisition.
BTMU noted that the proposed acquisition, including the transfer of certain employees, will significantly strengthen its project finance business in EMEA and will assist it in achieving its aim of becoming one of the leading project finance banks globally.
The proposed sale is subject to the signing of a legally binding sale and purchase agreement as well as subsequent receipt of required regulatory approvals. The banks are expected to sign the agreement by year end.
Separately, Mitsubishi UFJ Financial said today that its net income for the first half ended Sept. 30 more than doubled to 356.7 billion yen or about US$4.3 billion from 140.9 billion yen in the previous year. The Tokyo-based company also boosted its full-year profit target to 500 billion yen from 400 billion yen.
Earlier this month, Royal Bank Of Scotland had posted a narrower net loss for the third quarter, reflecting mainly lower impairment losses and improved performance in Retail & Commercial businesses. Looking ahead, the company said its fourth-quarter market environment remains challenging. RBS closed Friday's regular trading at $13.48 on the NYSE. RBS.L is currently trading at 41.75 pence, up 0.73 pence or 1.78%, on a volume of 14.18 million shares. MTU ended on Friday at $4.7 on the NYSE.

The growth of new hopes

The employment report for October and the national manufacturing survey released last week, surprised the financial situation even further. When a string of negative economic readings required to notify the Bank of Queen Elizabeth II, these data showed that the rate of recovery is still intact. Already price pressures do not exist, has experienced accelerated growth.
The Federal Reserve is really also inform the quantitative easing, roughly in line with what the market had expected. The FOMC has launched an active program to purchase and related gradual pace and duration of purchases to changing economic conditions and achieve the dual mandate of promoting full employment and price stability. The central bank said it would buy 600 billion U.S. Treasury securities in the long term in June or the rate of $ U.S. 75 billion dollars a month. The Fed also said to regularly review the pace and scope of the purchasing program in light of information received. At its meeting in September, the Fed said the pace of recovery in output and employment is still slow.
According to Danske Banken risk of downward adjustment in the total purchase amount exceeds the increase, given that core inflation is close to the floor, and the labor market is gradually improving in the coming months. However, the Fed has invited the wrath of other nations, because he believes that the growth of liquidity of the dollar would lead to a deterioration of the dollar and appreciation of their currencies.

In a pleasant surprise, the U.S. Farm earnings report shows more than expected increase of 151,000 jobs in the payroll. payroll for the previous two months'was revised to show a net upward revision of 110,000 jobs. While gains were widespread labor, manufacturing has lost jobs. The private sector added 159,000 jobs, the biggest increase in six months. As expected, the unemployment rate remained unchanged at 9.6%.
U.S. consumer spending rose 0.2% month by month in September, against expectations of 0.4%. Actual expenditures, adjusted for inflation, rose just 0.1%. Meanwhile, personal income fell 0.1%, 0.4% increase in translation in August. Mainly due to lower drop of 18% of unemployment insurance benefits, which expired. Personal savings fell for a third consecutive month decreased by 5.3%. Year after year the number of core index of consumer prices in personal spending slowed to 1.2% in September from 1.3% in August.
Impetus to the manufacturing sector should continue. The Institute for Supply Management said its manufacturing purchasing managers '\' index rose to 56.9 in October, 54.4 in September, and was the highest since May. The index of new orders rose 7.8 points to 58.9, while its backlog of orders index fell to 0, 5 points 46 Employment rose by 1.1 points 57.7. The index of export orders showed an increase from 6 points 60.5.
Service sector activity is still pretty strong, the department's non-manufacturing index rose to 54.3 in October from 53.2 in September. The new orders index rose 1.8 points to 56.7 and the employment index climbed 5.6 points to 58.4, while the employment index rose 0.7 points to 50.9. The unfilled orders index climbed to'50'levels, ranging from48 to 52 last month.
A report released by the Commerce Department showed that construction spending rose 0.5% month-on-month in September, defying expectations for a 0.7% decline. However, many of bounce offset by a downward revision from the previous month's reading. The increase in September was due to a 1.8% jump in private nonresidential construction. Government spending also showed resilience, rising 1.3%.
However, the report found the house last week softness. The National Association of Realtors said its pending home sales report fell 1.8% month-on-month in September.
As expected, gave the American midterm congressional elections and gubernatorial elections, Republicans an edge, if he has a majority in the House of Representatives, and their tally in the Senate, although Democrats managed to retain a narrow majority.
The unfolding week's economic calendar is fairly light, with the jobless claims and the Reuters / University of Michigan's consumer confidence report from the economic reports of significance. The Commerce Department's trade balance report for September, the Labor Department's import and export prices report for October, the Commerce Department's wholesale inventories report for September and the results of the Treasury auction round out the other financial events the week.

The U.S. trade deficit is expected to be a modest narrow in September as import growth has slowed after a surge in the previous three months. Import growth is likely to take a hit from a relatively weaker U.S. dollar and lower inventory investment costs. In the third quarter, the market pulled over 2 percentage points of growth.
Consumer confidence in the week may see a small bounce, with economists expecting Reuters / University of Michigan's consumer confidence index for October to rise slightly from last month's level. The expected upside is largely based on the strong stock market rally witnessed for most of October.

Monday
Federal Reserve Governor Kevin Warsh is due to the SIFMA Conference in New York to speak at 3:30 pm ET.

Tuesday
The Commerce Department is due to wholesale inventories report at 10 pm ET Fri. Economists expect wholesale store by the end of September show an increase of 0.6%.

In August, wholesale 0.5% month-on-month, resulting in an annual growth of 12.4%. Both durable and non-durable goods sales grew by 0.5% each on a monthly basis. But wholesale inventories increased 0.8%, increasing the annual rate to 0.6%. Inventories to sales fell to 1.16 from 1.24 last month.

Wednesday
The trade gap data for September are due at 8:30 ET. Economists estimate that the trade gap fell to $ 46200000000 in Mon The trade measures the difference between imports and exports of both tangible goods and services.
The value of imports grew much faster than the value of exports in August rose in the month the trade deficit by more than economists had expected.
The trade deficit rose to $ 46300000000 in August from a revised $ 42600000000 in July. Economists had expected the deficit to $ 44500000000 $ 42800000000 to extend the originally reported for the previous month.
Labor Department is due to regular jobless claims report for the week ending on November 6 at 8:30 ET release. Economists expect a drop in claims to 450,000.
After three months reported a low for the first time applications for unemployment benefits last week, jobless claims rose modestly in the week ended 30. Initial jobless claims rose to 457,000 last week's revised figure 437,000. Economists had expected jobless claims to edge up to 445,000 of the 434,000 originally reported for the previous week
The export and import price index for October, reflecting changes in the prices of non-military goods and services traded between the U.S. and the rest of the world gives, will end at 8:30 ET.
In September import price index declined 0.3% in September after a 0.6% increase over the previous month. The decrease was mainly attributable to a 3.1% fall in prices of fuel imports, but the decrease was partially offset by an increase of 0.3% in non-fuel import prices.
Meanwhile, export prices in September at a slower pace of 0.6% compared with an increase of 0.8% in August. The rise in agricultural export prices fell to 2.4% from 4.1% and non-agricultural export prices rose 0.3%.
The Treasury of the budget, a monthly account surplus or deficit of the federal government will be released at 2 PM ET. The budget is considered an indicator of budgetary trends and the fiscal stance should be. Economists estimate a deficit of $ 140.000.000.000 in October.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report for the week ending November 5 at 10:30 ET.
Crude oil stocks rose by 2 million barrels to 368.2 million barrels in the week ended Oct. 29. Stocks are still above the upper limit of the average range.
Gasoline inventories fell by 1.6 million barrels, but they are above the upper limit of the average range. Distillate stocks also fell, dropping by 3.6 million barrels. Refinery capacity utilization averaged 81.8% over the four weeks ended Oct. 29 compared with 83.7% the previous week.

Thursday
No major economic reports released on Thursday following a government holiday.

Friday
The preliminary report from Reuters / University of Michigan's consumer confidence survey for November will be released at 9:55 ET. The consumer mood index is expected to increase from september's 67.7 to 69