WITH THE ink hardly dry on its £49 billion purchase of ABN Amro, Royal Bank of Scotland has launched a £4bn sale of assets that includes prime property in the City, a portfolio of luxury hotels in London, and a train-leasing business.

The clear-out of assets, which RBS has said will help finance the ABN Amro acquisition, follows last week's sale for £1.3bn of its half share in Southern Water to a consortium led by JP Morgan Chase.

Next on the auction block, according to sources, will be the rest of RBS's £1.1bn portfolio of hotels comprising 11 Hiltons and several Marriotts including one each in Edinburgh and Glasgow. The timing, however, will depend on the premium London properties attracting strong prices.

However, some observers say RBS is selling into a difficult financial market and may be lucky to attract full value for what will be debt-funded purchases. One also expressed surprise that the bank was unloading such a large portfolio of investments at the same time, a tactic which generally reduces their market value.

The total £4bn in assets has been acquired over the past four years and has since appreciated substantially in value. The £900 million portfolio of commercial property in the UK reportedly includes the premises of Coutts, the Queen's banker, at 440 The Strand. RBS is understood to plan a sale and lease-back deal for the properties.

The London hotels, valued at up to £650m, include the Waldorf Hilton at Aldwych in the West End, the newly refurbished four-star Cumberland at Marble Arch, and Heathrow's Park Inn. The entire hotel portfolio includes Marriott hotels, some of an original 16-strong package of Hiltons bought in November, 2005 for about £400m, and other individual properties.

The decision to break up the portfolio and repackage it for individual sale rather than as a job lot follows two earlier failed attempts to get it off the RBS books, largely because of the severe credit squeeze in the financial markets. The latest attempt - to Robson Asset Management established by Jeremy Robson, RBS's former head of the bank's corporate real estate team - fell over in August and prompted a decision to seek one-off buyers.

However, the Angel Trains subsidiary, which owns the 53-strong fleet of Pendolino tilting trains leased to Virgin on its west coast run, has a value of around £2bn and is expected to find ready buyers.

RBS would not comment directly on the asset sales but has confirmed that the proceeds will be used to boost funds for the acquisition of ABN Amro.

The market for giant-sized asset purchases, and especially for commercial property, has however deteriorated in the past three months due to the debt crisis.

But RBS could get an unexpected boost from the radical revision of the capital gains tax forecast this week by chancellor Alistair Darling. According to investors, the planned introduction of an 18% flat rate from April could fuel the commercial property market because the new law would abolish the higher tax penalties on short-term gains. It may also allow the income from properties to be packaged as capital gains and thus be taxed at a lower rate.

The acquisition of ABN Amro is not the only reason for the bank's appetite for liquidity. The fall-out from September's sharp rise in inter-bank lending rates has prompted a flight to cash and RBS, a major provider of leveraged loans in Europe, has joined other banks in spring-cleaning its debt book.