HSBC buys RBS’s India retail biz for $1.8 b
UK-based Royal Bank of Scotland (RBS), on Friday, announced sale of its retail and commercial banking business in India worth US$1.8 billion (about Rs 8,500 crore) to British banking major, HSBC.
RBS, which received a £45.5 billion bailout from UK government post 2008 financial crisis, will sell its retail and SME business in India for premium of US$95 million, which would be over adjusted net asset value of the bank’s businesses in the country. The exact amount to be paid by HSBC would be worked out later, officials said.
The sale coincides with RBS announcing in London that it has offloaded its metals, oil and European energy business to US-based bank JP Morgan in a US$1.6 billion deal.
RBS, which had in 2007 taken over ABN Amro Bank, has 31 branches, 11 lakh customers and 1,800 employees in India. HSBC serves 15 lakh customers through a network of 50 branches and 7,000 employees.
After acquisition, which is expected to complete in the first half of 2011, HSBC would move closer to Standard Chartered Bank in terms of branch network.
Among foreign banks, StanChart has a network of 94 branches, followed by HSBC (50) and Citibank (42). Even after the sale, RBS said it would continue to retain its wholesale and investment banking businesses in India.
SME business
“Post sale of its retail and SME businesses, RBS will continue as leading global wholesale and investment bank, transaction services and private bank in Asia Pacific with significant presence in 11 markets, including core markets such as India and China. This gives us excellent geographic footprint,” RBS Country Head Madan Menon said. RBS was earlier reported to be talking to Standard Chartered Bank for a possible sale of Indian assets. The takeover of RBS’ Indian businesses, according to HSBC Group Country Head Naina Lal Kidwai “Is an important addition to our existing network and testament to our ambition to expand our footprint in India.”
HSBC Group Chief Executive & Chairman of The Hongkong Shanghai Banking Corporation Ltd Michael Geoghegan said “the main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of world’s largest and fastest growing developing markets in the last two years.” HSBC, which bought assets of RBS through its wholly owned subsidiary The Hongkong Shanghai Banking Corporation Limited, said “(it) will apply to Reserve Bank of India for branch licenses required to supprt the acquired businesses.”
The deal is the third major transaction for HSBC in India. In June 2008, HSBC entered into joint venture insurance company with Canara Bank and Oriental Bank of Commerce, gaining access to a distribution network of 5,000 branches and 50 million customers.
