HITTING A HURDLE
Mumbai, Nov. 30: The sale of RBS’s Indian retail and commercial banking operations to HSBC has fallen through.
Both the foreign banks have decided not to proceed with the transaction as the deadline expired today without the required conditions being met. They did not specify the reasons for the failure of the proposed deal.
“The agreement for the acquisition by The Hongkong and Shanghai Banking Corporation Ltd of The Royal Bank of Scotland Group plc’s Indian retail and commercial banking businesses has expired as the long stop date of November 30 has been reached without all conditions required to close the transaction being satisfied,” HSBC said on Friday.
RBS, which is owned by the UK government, also said that the deal, which was announced on July 2, 2010, had lapsed today and the sale would not be proceeding.
However, the bank added that it would begin to wind down its retail and commercial banking businesses 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 with the London Stock Exchange, HSBC, however, said it remained committed to pursuing growth in India.
Officials of the foreign bank declined to comment on which specific conditions for the transaction were not met.
It was in 2010 that RBS had announced the sale of its retail and commercial banking businesses in India to HSBC. The deal was part of its plans to exit from some of the businesses outside its home country.
However, there were impediments to the deal at the beginning with the Reserve Bank reportedly questioning the necessity of the transaction and how RBS proposed to comply with priority sector lending obligations after the sale.
The central bank subsequently approved the sale, but it came with conditions attached. The RBI insisted that the branch transfer would not be automatic and that HSBC would have to apply for new licences.