A proposed acquisition by global banking giant HSBC of another UK-based bank RBS’ Indian retail and commercial banking business has failed to fructify, as the transaction deadline expired today without the requisite conditions being met.
“The agreement for the acquisition by The Hongkong and Shanghai Banking Corporation Limited of The Royal Bank of Scotland Group plc’s Indian retail and commercial banking businesses has expired as the long stop date of 30 November 2012 has been reached without all conditions required to close the transaction being satisfied,” HSBC said on Friday.
RBS also separately said that the deal, announced on July 2, 2010, has lapsed today and the sale will not be proceeding.
However, it added that RBS would begin to wind-down its retail and commercial banking business in India, as per its strategic objective to reduce or exit its non-core assets and businesses, while meeting all customer obligations.
In a regulatory filing to the London Stock Exchange, HSBC, however, said it remains committed to pursuing growth in India, without specifying the conditions that were required to be met for the RBS deal.
More than two years ago in July 2010, RBS had announced sale of its retail and commercial banking business in India, estimated to be worth USD 1.8 billion (about Rs 8,500 crore) at that time, at a premium to rival British bank HSBC.
The deal was part of RBS’ plans to exit from some of the businesses outside its home country, although the bank was looking to retain its wholesale and investment banking businesses in India even after this sale.
The deal also expected to help HSBC further expand in India, which was looking to get about two dozen new branches through the deal.
The proposed transfer of branch licenses is said to have been agreed by the Reserve Bank of India this year itself, although the deal as such was approved long ago.
The Competition Commission of India had also approved the deal in April this year.
“HSBC Asia Pacific is a wholly-owned subsidiary of HSBC Holdings plc. HSBC remains committed to pursuing growth in India, a key strategic market for the Group, through its existing operations,” HSBC said on Friday.
In a separate statement, RBS also said that its business in India is profitable and comprised total assets of 190 million British pounds as on September 30, 2012. It has 31 branches in the country that generated revenue of 42 million in the first nine months of this year.
However, these businesses account for only 0.5 per cent of the group’s remaining non-core assets worth over 65 billion British pounds, RBS said.
HSBC is one of the major foreign banks present in India with approximately 30,000 employees in its banking, investment banking and capital markets, asset management, life insurance, software development and global resourcing operations.
In 2008, the HSBC Group acquired a majority stake in HSBC InvestDirect that has enabled it to offer retail brokerage services to its customers across a wider geography in the country.
It also has a joint venture with two of India’s leading public sector banks, establishing Canara HSBC Oriental Bank of Commerce Life Insurance Company in June, 2008.
HSBC’s network in India comprises 50 branches of HSBC India, 29 branches and 11 franchisee outlets of HSBC InvestDirect and 28 offices of its 26 per cent held Canara HSBC Oriental Bank of Commerce Life Insurance Company.
Globally, HSBC group is present in over 80 countries and territories in Europe, the Asia—Pacific region, North and Latin America, and the Middle East and North Africa.
With assets of over USD 2.7 trillion as on September 30, 2012, HSBC Group is one of the world’s largest banking and financial services organisations.