RBS to close banking operations in India by year-end
17 May 2016
Royal Bank of Scotland NV (RBS), Britain's largest state-owned bank, is winding up operations in India. The bank would commence closing its corporate, retail and the institutional businesses in the country in a phased manner and has already started informing its customers.
The bank in statement on Monday, "Royal Bank of Scotland (RBS) Plc would choose to wind up its India banking operations over seeking other exit options."
RBS, which has been struggling to contain mounting losses, confirmed that it would close it retail banking branches in India by the year-end and cease to be functional in India barring for its back office unit that will support its global network.
"After examining a number of options for our banking business in India, we decided to wind down our corporate, institutional and retail banking businesses in India," RBS stated, adding that the bank will shut down all its 10 retail branches in India in a phased manner.
RBS had earlier proposed to expand its business through acquisitions but has been held back by regulatory norms and decided otherwise, Financial Times reported earlier on 12 April.
The bank had also held that it was not feasible for it to sell its India businesses in its entirety and hence the decision to sell individual parts rather than an outright winding up.
However, a Reuters report quoting its chief executive Ross McEwan said RBS's decision to close its India business was part of its overall global plan to sell or shut businesses in two-thirds of the countries it operates in.
RBI is planning to limit banking operations to 13 countries from the existing 38.
Closure of RBS's banking operation in India will affect 700 jobs, but its 13,000-strong back-end employees supporting global operations will continue to exist in India, FT said.
"We are committed to provide our employees with a range of support and will ensure that they are treated in a fair and transparent manner in line with RBS' principles and local policies," RBS stated in a release on Monday.
In May 2013, RBS had announced plans to consolidate its retail and commercial banking business in India.
RBS had since shut 23 of its 31 branches, which it had bought from ABN Amro in 2007 (See: Royal Bank of Scotland- Fortis- Santander consortium acquires ABN Amro in world''s biggest banking takeover).
Later, in September, RBS managed sell its credit card business and mortgage portfolio to Ratnakar Bank and its private banking arm in a management buyout.
The bank also sold its wealth management business, which had assets worth nearly Rs12,000 crore, to Sanctum Wealth, a firm led by Shiv Gupta and backed by a clutch of venture capital investors.
RBS, which has been run down by the 2008 financial crisis, decided to focus on its core strength – institutional and corporate banking and sold off its banking operations in six countries to Australia's ANZ in 2009.