RBS Deserts Dubai Over £6.7bn Refinancing Plan

By Mark Kleinman, City Editor

The state-backed Royal Bank of Scotland (RBS) is resisting plans for a restructuring of one of Dubai's largest conglomerates, underlining the UK lender's rapid retrenchment from an ill-fated global expansion.

Sky News understands that RBS raised concerns at a meeting of Dubai World's creditors in London last week, indicating that it is unhappy with a plan to extend a $10.5bn (£6.7bn) loan due for repayment in 2018 by a further four years.

Dubai World, which has interests in logistics, property, transport and urban development, is keen to take advantage of an improving economy to secure more favourable terms for its borrowings.

The state-owned conglomerate struck a $25bn debt restructuring deal in 2011, having run into trouble during the global financial crisis.

It now needs the approval of just over two-thirds of its creditors, which include scores of regional and international banks.

Once that level is secured, the remaining creditors can be forced to accept the proposed terms under a local law known as Decree 57.

RBS does not hold enough of Dubai World's debt to block the restructuring by itself, and insiders suggested that there was sufficient support for the proposals to ensure that they would be implemented.

Like other British banks, RBS expanded rapidly in Dubai and elsewhere in the Middle East as the Emirates' economies took on huge borrowings to accelerate their economic development.

Since its taxpayer bail-out in 2008, however, RBS has gradually reduced its international presence, and is understood to be keen to see the Dubai World loans repaid at the earliest opportunity.

One observer cast doubt on the interpretation that RBS was interested in seeking to block the refinancing, suggesting that the bank was simply "agitating" in order to find a buyer for its share of Dubai World's debts.

A further meeting of creditors took place in Dubai on Monday.

RBS declined to comment.

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