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Sale of RBS’ Indian unit to HSBC collapses


Banks fail to reach final agreement and data transfer deadline

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A move by Royal Bank of Scotland (RBS) to sell its Indian commercial and retail banking unit to HSBC has collapsed two years after an initial agreement was reached.

Neither RBS nor HSBC commented on the reasons behind the breakdown of talks when contacted by CFOWorld. However, local media reports in India suggest both banks failed to streamline data transfers and meet necessary local regulatory conditions by Friday's stated deadline.

The initial agreement was reached in July 2010. It is thought that RBS’ Indian unit is profitable with revenues of £42 million for the first nine months of 2012, 31 branches and 400,000 customers.

HSBC was set to pay a premium of up to £60 million over the tangible net asset value (TNAV) of the unit. In a statement, RBS said it would now wind down the Indian business.

"Consistent with RBS' strategic objective to reduce or exit its non-core assets and businesses, it will begin to wind down its retail and commercial banking business in India, whilst meeting all customer obligations," it said.

Earlier this year, the bank was hit by severe IT issues in the UK. Subsequently, its £1.6 billion sale of 316 UK branches to Banco Santander also collapsed after over two years of talks. RBS is 82 percent owned by the UK taxpayers following a Treasury cash injection in the aftermath of the global financial crisis of 2008.

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Sale of RBS’ Indian unit to HSBC collapses
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