RBS sells some Indian assets to Ratnakar Bank

Ratnakar Bank, the smallest of India's commercial banks, on Friday said it had acquired British banking major Royal Bank of Scotland's (RBS) business banking, credit cards and mortgage portfolio.

The price of the deal was not disclosed.

According to banking sources, RBS's retail assets in India were valued at Rs150-200 crore.

The British bank is under tremendous pressure to sell its assets to restore its health. It has already shed around 900 billion pound worth of assets and is focuses on lending to British households and small businesses (See: Bank of England governor calls for RBS to be split and sold).

Earlier this year, RBS said it will close 23 of its 31 branches in the country as part of its plan to consolidate retail and commercial banking operations. The foreign lender now aims to maintain presence across 10 locations in India by the end of 2013.

The deal is subject to approvals from the Competition Commission of India.

This acquisition is expected to increase Ratnakar Bank's low-cost current account and savings account deposit base.

As per the deal, Ratnakar Bank will absorb about 150 of RBS' employees; about 120,000 customers of RBS India will be now Ratnakar's customers. However, RBS India will not transfer its branches to Ratnakar.

RBS had struck a deal with Hongkong and Shanghai Banking Corporation (HSBC) to sell its retail and commercial banking businesses, but the deal fell as it was not approved by the Reserve Bank of India.

Started in 1942, Kolhapur-based Ratnakar Bank has a total loan book of Rs6,376 crore, and has 130 branches.

It is backed by investors including Aditya Birla Private Equity, Housing Development Finance Corp. Ltd, ICICI Emerging India Fund, IDFC Spice Fund, Ascent Capital, Faering Capital, Samara Capital, TVS Capital and Norwest Venture Partners.

Last month, IndusInd Bank was reported to have been the top contender for the retail assets of RBS in India. (See: IndusInd Bank leads race for RBS's retail assets in India)