U.K.-based Royal Bank of Scotland (RBS) on Friday announced sale of its retail and commercial banking business in India worth $1.8 billion (about Rs.8,500 crore) to British banking major HSBC.

RBS, which received a 45.5 billion pound bailout from the U.K. government post the 2008 financial crisis, will sell its retail and SME business in India for a premium of $95 million, which would be over the adjusted net asset value of the bank's businesses in the country.

The exact amount to be paid by HSBC would be worked out later, the officials said.

The sale coincides with RBS announcing in London that it has offloaded its metals, oil and European energy business to U.S.-based bank JP Morgan in a $1.6 billion deal.

RBS, which had in 2007 taken over ABN Amro Bank, has 31 branches, 11 lakh customers and 1,800 employees in India. HSBC serves 15 lakh customers through a network of 50 branches and 7,000 employees.

After the acquisition, which is expected to complete in the first half of 2011, HSBC would move closer to Standard Chartered Bank in terms of branch network. Among the foreign banks, StanChart has a network of 94 branches, followed by HSBC (50) and Citibank (42).

Even after the sale, RBS said it would continue to retain its wholesale and investment banking businesses in India.

“Post the sale of its retail and SME businesses, RBS will continue as a leading global wholesale and investment bank, transaction services and private bank in Asia Pacific with a significant presence in 11 markets, including core markets such as India and China.

“This gives us an excellent geographic footprint, accounting for 90 per cent of our current revenues in the region”, RBS Country Head Madan Menon said.

RBS was earlier reported to be talking to Standard Chartered Bank for a possible sale of Indian assets.

The takeover of RBS's Indian businesses, according to HSBC Group's country head Naina Lal Kidwai, “is an important addition to our existing network and testament to our ambition to expand our footprint in India.''

“We see tremendous growth potential in this country, both in helping domestic and international companies capture opportunities in India's growing trade and investment flows with the world and in meeting the financial needs of its rising affluent consumer market,'' she added. Commenting on the deal, HSBC Group Chief Executive and Chairman of The Hongkong Shanghai Banking Corporation Michael Geoghegan said “the main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of the world's largest and fastest growing developing markets in the last two years.”

More In: Companies | Business