Royal Bank of Scotland Group (RBS.L) has agreed to partner with alternative asset manager Blackstone to create a £1.4 billion UK commercial real estate loans fund.

The development is part of the bank's strategy to manage its exposure to the loans held within its non-core division.

Bruce Van Saun, chief financial officer at Royal Bank of Scotland, said, 'This is an innovative agreement that allows RBS to tap into the liquidity in the market, to reduce our risk over time and to benefit from the possibility of upside in the portfolio.

'We continue to make good progress with our non-core division disposal programme which is key to derisking the group's balance sheet and making RBS a safer bank.'

Blackstone were chosen as partners through a bidding process and would, according to the bank, allow it take part in any potential future profits.

Funds already managed by Blackstone will acquire a 25 per cent stake in the new fund, with Royal Bank of Scotland selling its 75 per cent stake over time.

To receive more relevant articles like this one, why not sign up to our weekly newsletters, click here