HSBC to get branch licences in three under-banked region
HSBC is set to receive licences for three branches in under-banked areas prior to
acquiring retail and commercial banking assets of Royal Bank of Scotland Group.
HSBC is expected to complete the deal in the first half of 2011. RBS, which had acquired 31 branches in the country when it bought out the ABN Amro Bank NV Asian operations, in 2007, has decided to retain five branches and surrender the remaining to Reserve Bank of India (RBI). "Of the 31 branch licences, RBS will retain five and surrender the remaining to RBI. Following which HSBC has applied for fresh licences and accordingly RBI will issue three branch licences to HSBC in under-banked areas,'' said a source.
In June 2009, RBI had declined to transfer the RBS branch licences to a prospective buyer as the proposed transaction was a portfolio sale and not a bank buyout. "HSBC has begun consolidating the retail and small and medium enterprises business portfolio of RBS,'' said the source. "HSBC has wound down the unsecured loan business which includes the
credit card and
personal loan book. They are not sourcing fresh unsecured loans,'' added the source. RBS's advances book has shrunk to Rs13,406 crore at the end of March 2010 as against Rs16,660 crore in the previous year, said the RBI data.
This is in keeping with the HSBC consumer banking strategy which is consciously scaling down its unsecured book. HSBC's personal financial services business posted a loss of $50 million for the half year ended June 20, 2010 as against a loss of $124 million, said the bank's income statement. The bank's other personal loan's portfolio dipped to $635 million at the end of June 2010 compared to $1,168 million.
RBS's consumer banking business has posted an operating loss of about Rs587.30 crore at the end of March 2010 as against an operating loss of Rs239.30 crore in March 2009. However, the bank's provisioning towards non-performing loans has dipped to Rs29.36 crore at the end of March 2010 as against Rs 337.90 crore in the previous year.
"They continue to service the existing credit card clients. HSBC is keen on growing the Van Gogh preferred banking platform which is the private banking platform it will acquire from RBS,'' added the source. HSBC's private banking business posted a profit of $3 million at the end of June 2010. HSBC's acquisition of the RBS retail and commercial banking assets was announced in July 2010 for a premium of $95 million over the net asset value of the business, which has not been set yet. The price will be subject to clawbacks depending on losses in unsecured lending in the two years after the deal is completed.
This acquisition will significantly increase HSBC's scale and give them access to 1.1 million customer relationships with assets of $1.8 billion at the end of 31 March 2010. HSBC expects to complete the deal in the first half of 2011
HSBC to get branch licences in three under-banked region
By: Bhavana Jhingan
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