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SCH swaps its way quietly out of RBS

Banco Santander Central HispanoAmount: £1.3 billionAnnounced: November 29 2002

The Spanish bank, which retains a 5% holding in RBS, is said to have executed the disposal through a series of swap contracts with several banks including UBS Warburg and JPMorgan while keeping each of them in the dark about the deal's eventual size and each other's involvement.

The disposal took place against the backdrop of several other capital-raising deals that SCH undertook within about a month of each other to help raise its core tier I capital ratio to a target level of 5.5%. SCH is trying to reduce its risk profile through a three-pronged strategy of cutting down on its Latin American exposure, reducing its industrial portfolio, and increasing its capital ratios. SCH has been promising investors on every roadshow it's been on over the past year that it will raise its core tier I ratio, which has taken a battering because of exposure to Latin America.

On November 25, SCH raised e730 million through a rights issue for its Banesto retail bank subsidiary. The rights issue, which amounted to a 12% stake in the bank, has generally been viewed as a quasi-IPO. It priced at e7.50, below the initial indicated range of e8 to e9.94,

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