RBS mulls sale of Bank of China stake

LONDON (Reuters) - Royal Bank of Scotland is considering selling its 4.3 percent stake in Bank of China as part of a review of its international assets, it said on Thursday.

"RBS is currently examining all of its investments as part of the strategic review launched in the final quarter of 2008. This includes our investment in Bank of China," the bank said in a statement.

Stephen Hester, RBS's new chief executive, was in Asia this week as part of his review. He met Bank of China representatives and regulators and flagged the possible divestment, the Financial Times reported.

By 11:25 a.m. RBS shares were up 4.3 percent at 51.1 pence, one of the strongest stocks in a firmer UK bank sector.

The likelihood that RBS will sell the $4 billion (2.6 billion pound) stake increased after the UK government took a 57 percent stake in the bank after a bailout last October, and Hester said there would be "no sacred cows".

Swiss bank UBS AG (UBSN.VX) last month sold its stake in Bank of China, and Bank of America (BAC.N) on Wednesday sold a 2.5 percent stake in China Construction Bank (601939.SS) for just over $2.8 billion.

But HSBC (HSBA.L) said on Thursday it would not sell down its 19 percent stake in China's Bank of Communications (601328.SS), soothing worries about an exodus of overseas investors. The two banks reaffirmed their long-term strategic relationship.

RBS said any decision on the Bank of China stake would be announced to the market as required, and until them it would not comment on individual elements of its strategic review.

Hester is due to complete the review by the end of June. RBS has had its insurance arm up for sale for months. It is expected to drastically shrink its investment bank, and could look at operations such as its Citizens unit in the United States.