MARKET TALK:HSBC Dn 0.5%;RBS Indian Units Buy Impact Small-JPM

5th Jul 2010 04:39

0339 GMT [Dow Jones] HSBC (0005.HK) down 0.5% at HK$71.35, in line with HSI's 0.5% fall, as news it will buy Indian retail and commercial businesses of Royal Bank of Scotland (RBS) likely taken as neutral. JPMorgan notes transaction is small relative to HSBC (0.08% of total assets) or to Asia ex-HK (0.81% of total assets. Notes, gross asset value of transaction is US$1.8 billion, while consideration is US$95 million over tangible net asset value (subject to discount amounting to 90% of unsecured lending losses within 2 years after deal completion (expected to be 1H 2011, subject to regulatory approval). "This transaction is in line with the Group's focus on Asia and re-affirms our view that growth in Asia, combined with exiting North America, should continue to drive a sustainable increase in ROE from 9.0% (FY10E) to 15% (FY12E)." Keeps HSBC at Overweight, HK$115 target. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 04, 2010 23:39 ET (03:39 GMT)