HSBC buys RBS' Indian banking businesses
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HSBC has agreed to buy Royal Bank of Scotland’s retail and commercial banking businesses in India.
The firms would not put a value on the deal but said it involved portfolios with a gross asset value of £1.18bn at March 31. The acquisition, subject to regulatory approvals, is expected to complete in the first half of 2011.
The total consideration will comprise a premium of up to £62m over the tangible net asset value of the Indian businesses at the closing of the transaction, less an adjustment equal to 90 per cent of any credit losses incurred on the unsecured lending portfolio in the two years subsequent to deal completion.
RBS’s Indian businesses currently have 1.1m customers served by over 1,800 staff through 31 branches. HSBC is set to apply to the Reserve Bank of India for branch licences required to support the acquired businesses.
HSBC group chief executive Michael Geoghegan says: “The main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of the world’s largest and fastest growing developing markets in the last two years.
“The combination of HSBC’s leading position in emerging markets and our distinctive financial strength mean that we are strongly placed to take advantage of opportunities like this for the benefit of customers and shareholders.”
HSBC group general manager and country head in India Naina Lal Kidwai says: “This transaction is an important addition to our existing network and testament to our ambition to expand our footprint in India.
“We see tremendous growth potential in this country, both in helping domestic and international companies capture opportunities in India’s growing trade and investment flows with the world and in meeting the financial needs of its rising affluent consumer market.”
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