Royal Bank of Scotland (RBS) on Thursday said the Reserve Bank of India (RBI) had not rejected its proposal to sell the bank’s retail and commercial banking businesses in India to Hongkong and Shanghai Banking Corporation (HSBC).
“We can confirm the Reserve Bank of India is agreeable to the transfer of our retail and commercial businesses in India to HSBC. We continue to work closely with HSBC and the regulators to complete the transfer in a manner that is in the best interest of our clients and employees,” RBS said in an e-mailed statement.
The deal, announced in July, 2010, was part of RBS' plan to retreat from some of its business in foreign markets. HSBC had agreed to pay premium of up to $95 million over the tangible net asset value of the businesses, once the deal was completed. The actual price, however, would depend on the quality of assets. The transaction was scheduled to be completed by September 30.
RBI, however, has not approved the deal yet. According to sources, the banking regulator was not comfortable with RBS selling its branches to HSBC, though the lender would continue its wholesale banking operations in India. Sources said the banks were re-working the structure of the deal.
Currently, HSBC has 50 branches in India, the second-most among foreign banks in the country. RBS has 31 branches.
HSBC has maintained the bank continues to “engage positively with the regulator” for this transaction. In an interview with Business Standard, Naina Lal Kidwai, country head for HSBC in India, said the regulatory approval was taking time due to the unprecedented nature of the deal.
RBS said India would continue to remain the third-largest employment centre for the group globally. “India remains one of the top three priority markets in the Asia-Pacific region for the RBS Group...Our commitment to India remains focused. We have been, and will continue to, invest strategically in India across our ‘go forward’ businesses,” it said.