RBS said it will now wind down the business after failing to conclude sale to HSBC
The Royal Bank of Scotland (RBS) has announced a planned sale of its Indian retail & commercial banking operations to HSBC has fallen through.
RBS said it will now wind down its India operations as a result.
The agreement to sell the 31-branch division to HSBC was originally announced in July 2010.
HSBC had agreed to pay a premium of up to $95 million (£59 million) over and above the net value of the business, though that premium would reduce if there was a rise in bad debt provisions.
Neither RBS or HSBC have offered comment on why the deal collapsed, though RBS said the sale had “lapsed with effect from November 30, 2012, and the sale will not be proceeding”.
The November 30 deadline was set to allow time to resolve regulatory approval and data and customer transfers.
RBS said: “Consistent with RBS's strategic objective to reduce or exit its non-core assets and businesses, it will begin to wind down its retail & commercial banking business in India, whilst meeting all customer obligations.
“There will be no immediate change for customers who will continue to be served as they are today.
“Any changes impacting them will be notified in a timely way and will be designed to minimise disruption.”
HSBC said it would continue to pursue growth in India through its existing operations.
RBS said its 400,000-customer India business – which boasted 1.1 million customers in 2010 - remains profitable, generating revenues of £42 million in the first nine months of this year with assets of £190 million.
A £1.7 billion deal to sell 316 RBS branches to Santander also collapsed in October.
RBS is being forced to sell the 316 UK branches by the European authorities in return for its £45 billion taxpayer bailout in 2008, which has left the bank 80 per cent taxpayer owned.
Santander pulled out of sale claiming it couldn't conclude the deal by the EU-set deadline.