UPDATE: HSBC To Buy RBS' Indian Retail, Commercial Ops

2nd Jul 2010 11:19

(Adds comment and detail.) By Patricia Kowsmann Of DOW JONES NEWSWIRES LONDON (Dow Jones)--HSBC Holdings PLC (HBC) said Friday that it will buy the Indian retail and commercial businesses of Royal Bank of Scotland Group PLC (RBS), which, as opposed to its peer, is shrinking its retail presence abroad and focusing on the U.K. HSBC said it will pay a premium of up to $95 million over the tangible net asset value of the businesses when the deal closes in the first half of next year, minus an adjustment equal to 90% of any credit losses incurred on the unsecured lending portfolio in the two years after the sale closes. The businesses that RBS is selling--comprised of 31 branches and over 1,800 employees--involve portfolios with a gross asset value of $1.8 billion at March 31. "This transaction is an important addition to our existing network and testament to our ambition to expand our footprint in India," HSBC's India head, Naina Lal Kidwai, said. The bank has more than 35,000 employees in the country, and its network comprises of 50 branches of HSBC India, 80 branches and 147 franchisee outlets of HSBC InvestDirect and 31 offices of its 26%-held Canara HSBC Oriental Bank of Commerce Life Insurance Co. The bank, although U.K.-based, is highly focused on Asia. RBS, meanwhile, has dubbed many of its retail operations in the region as non-core, following the financial crisis that led the bank to rethink its business. It expanded aggressively under former Chief Executive Officer Fred Goodwin, paying GBP10 billion for parts of Dutch bank ABN Amro Holding NV in late 2007. Those included the Asian operations. The U.K. bank, which is 83% owned by the government, will keep an investment banking and private bank presence in India. RBS is trying to finish divestments of the many businesses this year, when it is still expecting to post a full-year loss. It has said it should turn profitable again next year. The bank has been holding talks with HSBC on the Indian assets since last year, but discussions with regulators have held off a final deal until now. HSBC was also in talks to buy RBS' retail and commercial assets in China and Malaysia, according to people familiar with the situation, but both businesses could now be just run down by the bank instead. -By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, [email protected] (END) Dow Jones Newswires July 02, 2010 06:19 ET (10:19 GMT)