Deal expected to be finalised by next month.
Royal Bank of Scotland Group Plc is in talks to sell its Indian commercial and retail unit to HSBC Holdings Plc, as Britain’s biggest government-owned bank accelerates international asset disposals, a source in know of the development said.
The sides may agree on a deal as early as next month, the source added, declining to be identified because the talks are private. The unit has 1.3 million customers, 1,800 employees and 28 branches, according to the Edinburgh-based bank’s website.
Chief Executive Officer Stephen Hester is selling assets acquired by his predecessor, Fred Goodwin, who spent $100 billion and expanded the bank’s operations into more than 54 countries. The bank has announced the sale of four overseas units this week after agreeing to sales in Argentina, Kazakhstan, Pakistan and the United Arab Emirates.
“Goodwin seemed to be expanding for the sake of it,” said Bruce Packard, a London-based analyst at Seymour Pierce. “Hester is now pursuing the right strategy in trying to slim down the bank.”
Banco Santander SA, Spain’s biggest bank, offered as much as £1.7 billion ($2.52 billion) to buy more than 300 RBS branches in UK, a source said today.
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RBS is “making excellent progress in reducing the size of our balance sheet and thus, making the bank safer. Since the announcement of our strategic plan in February 2009 and the creation of our non-core division, we have exited or sold more than 20 businesses,” the source said.
Assets decline
The bank’s assets ballooned to more than £2.2 trillion in 2008, about one-and-a-half times Britain’s annual economic production at its peak. Following the world’s biggest bank bailout the same year, assets fell to £1.58 trillion at the end of March.
HSBC, Europe’s largest bank, yesterday agreed to buy the RBS Kazakh retail unit for as much as $52 million in cash, as it bolsters its presence in countries trading with China.
A spokesman for London-based HSBC declined to comment on talks about a possible purchase of the RBS India unit. At the moment, the bank has 2 million customers and 35,000 employees in 50 branches across India.
HSBC was previously in talks to acquire RBS assets in India, China and Malaysia, a source said. The discussions broke down last year following objections from Indian regulators, he said, adding RBS was still looking to sell the Chinese unit and may close the Malaysian business.
‘Most complicated’
The bank is undergoing the most complicated restructuring of any company in history, CEO Hester said last month. RBS has identified £258 billion of non-core assets to sell or run down by 2013, it said in its annual report in March.
The bank is also in discussions to sell its investment banking operations in Chile and Uzbekistan. The units employ about 80 people each.
Already agreed RBS unit sales include assets in Singapore, Taiwan, Indonesia, Hong Kong, the Philippines and Vietnam to Australia & New Zealand Banking Group, as well as the divestment of its Colombian investment-banking business to Bank of Nova Scotia in March.
RBS is withdrawing from 16 countries and scaling back in a further 21. The bank said it will remain in 17 “core countries,” including US, Australia, China, France, Germany, the Netherlands, Sweden and Spain.