Money & Banking

HSBC’s proposed takeover of RBS India assets falls through

Vidya Ram London | Updated on November 30, 2012 Published on November 30, 2012

In July 2010, RBS had announced the sale of its retail and commercial banking business in India to HSBC.

The plan for sale of Royal Bank of Scotland’s assets in India to HSBC has fallen through, after negotiations that commenced over two years ago failed to result in a deal in time for a deadline on Friday.

To wind down biz

RBS, which is 82 per cent-owned by the British government, will instead wind down its retail and commercial banking business operations in India. The company said that there would be no immediate change for customers, and that changes impacting them would be made in a “timely way” to minimise disruption.

HSBC said it remained committed to pursuing growth in India through its existing operations. HSBC and RBS announced plans for the sale of the assets in July 2010. The deal was expected to take place at a small premium.

RBS acquired its Indian operations, with 31 branches, and 400,000 customers, in 2007, as part of the RBS, Fortis, and Santander consortium takeover of ABN Amro.

However, in 2009, after the UK Government was forced to step in to rescue the bank (it posted losses of $34 billion for the year 2009) RBS announced plans for a major restructuring, through the sale or winding down of non-core assets globally.

Earlier this month, the bank confirmed that it was in discussions to sell its 15.6 per cent stake in China’s Ping An Insurance Group.

India revenues

The RBS Retail & Commercial business in India generated revenues of £42 million in the nine months to September, and has assets of around £190 million.

“For HSBC the acquisition wouldn’t have been transformational in India, though it would have been an appropriate opportunity to add branches,” says Ian Gordon, a banking analyst at Investec in London.

“It seemed like a bolt on in a market where regulatory constraints make it hard to grow at the pace they would like to grow.”

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Published on November 30, 2012
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