To exit private banking; Indian operations to focus on offshoring.
The Royal Bank of Scotland (RBS) today said that it will sell its retail and commercial banking business along with a part of its global banking and markets (GBM) division in India as part of the global restructuring exercise aimed at focusing on core markets such as the United Kingdom, the United States and Ireland.
The bank, which still operates in India under the ABN Amro brand and employs 10,000 people here, will shift the retail and commercial banking business in Asia to its non-core business portfolio and exit. Further, a part of the GBM business, comprising debt financing, risk management and investment services, will be hived off. The two businesses together have 3,000 employees in India. Private clients business is also on the disposal list.
RBS, however, intends to operate the off-shoring unit with 7,000 employees in India. For its global transaction services (GTS), responsible for transaction banking, and GBM operations, India has been identified as one of the primary focus countries.
While the bank scales down operations on the retail and commercial banking front, it will look at inorganic growth opportunities on the GTS front, an RBS said.
A host of banks are in the fray to acquire the retail and commercial banking portfolio with the size of the Asian business estimated at £8.3 billion but the asset size for the Indian operations was not known.
In India, the consumer banking portfolio was estimated at around £982 million at the end of 2008, with the maximum delinquency seen in the credit card portfolio.
| India consumer finance portfolio | ||
| Segment | Balance In £mn | % of balance# |
| Credit cards | 217 | 7 |
| Personal loans | 343 | 4 |
| Mortgages | 194 | 2 |
| SME | 228 | 1 |
| # Due for over 90 days Source: RBS | ||
While ANZ, Standard Chartered and DBS are said to be in the fray, a spokesperson did not say if the Indian business would be hived off and sold separately. No Indian player has, however, evinced interest so far, sources familiar with the developments said.
“How RBI deals with transfer or branches is a key issue. If it is just sale of portfolio then the central bank will not have a problem,” said a banker.
“Net credit losses, which includes provisions, appear high since the numbers disclosed are for 90-day overdues. But the wealth management portfolio is attractive,” added a private bank executive.
While asset impairment in the Asia was estimated at around £200 million (around $287.5 million) due to deterioration in consumer credit portfolio, with a large part of the increased provisioning on account of the Indian operations.
ABN Amro India head Meera Sanyal did not comment on the sale process. A bank spokesperson said talks would be initiated for the sale of the business but did not provide any time frame.
