RBS Royal Bank of Scotland Group PLC

(Rewrites, adds detail.)

By Simon Zekaria

LONDON--Royal Bank of Scotland Group PLC (RBS) on Monday said its Ulster Bank Ireland Ltd. and Ulster Bank Ltd. units have entered into an agreement to sell a portfolio of Irish real estate loans to a unit of Irish housebuilder Cairn Homes PLC (CRN.LN) and an affiliate of private equity firm Loan Star Funds for around 360 million pounds ($543 million) in cash.

The bank, which is majority owned by the U.K. government, said the carrying value of the loans at Dec. 31 is about GBP115 million. Gross assets were about GBP1.63 billion and the loans generated a loss of about GBP28 million in the year to Dec. 31.

RBS said the transaction expects to generate a gain compared to carrying value of about GBP245 million after associated costs, which will be recognized in the fourth quarter, it said.

Cairn Homes said the loans include 31 residential development sites. 91% of the portfolio lands are located in Dublin and surrounding commuter locations. With a 75% share in the portfolio, the company said it can build over 14,000 new homes over the coming years, with an expected net development value of over EUR2.00 billion ($2.16 billion).

The bank expects completion of the deal at the end of the year. It said it will use proceeds from the deal for "general corporate" purposes.

It added the transaction is in line with its strategy to strengthen its capital position and reduce its risk exposure.

At 1100 GMT, RBS shares down 1 pence, or 0.2%, at 303 pence.

Write to Simon Zekaria at simon.zekaria@wsj.com

(END) Dow Jones Newswires

December 07, 2015 06:30 ET (11:30 GMT)

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