RBS's Asian Bank Asset Disposals Face Regulatory Snags - Report

Tom Burroughes

22 April 2009

Regulatory uncertainties surrounding the sale of Royal Bank of Scotland’s Asian assets could limit the price that bidders are prepared to offer and possibly delay any divestment, according to people familiar with the sale, the Financial Times said.

The UK bank, which is the parent of private banking businesses Coutts, RBS Coutts and Adam & Co, has started to offload its retail and commercial operations in eight Asian countries. The move has attracted interest from large groups including HSBC, Standard Chartered and ANZ, the Australian bank, as well as smaller domestic players.

However, the sale is dependent on securing regulatory approval for the deal in individual markets and there are fears that authorities in key markets, such as India and China, could object to the transfer of RBS’s branches to a new owner.

RBS has not, however, moved to spin off its wealth management businesses and the bank has told WealthBriefing that it is committed to these operations.

The FT report noted that India and China place tight restrictions on the ability of foreign banks to expand retail branch networks and have been willing to prevent overseas banks from growing their footprint via acquisition.

In 2005, the Reserve Bank of India refused to allow StanChart to acquire the two branches owned by the Bank of Bahrain and Kuwait. RBS’s Asian retail assets include 170 branches, including 28 in India and 13 in China.