Australia and New Zealand Banking Group Ltd (ANZ) is reportedly one of the frontrunners to acquire most of the Royal Bank of Scotland’s (RBS’) Asian operations including the India assets. RBS’ record loss of £24.1 billion is putting enough pressure on the UK banking major to offload its Asian operations, which include ABN AMRO-branded banking networks in Hong Kong, China and India. RBS has hired advisers from Morgan Stanley and UBS AG to manage the sale process.
ANZ is reported to have given the manadate to Credit Suisse to help steer its bid for the businesses which may eventually be sold for as much as $3 billion. ANZ was present in India before. It had exited India in 2000, after selling its Grindlays Bank unit to Standard Chartered Plc. for $1.34 billion. It tried to get back to India again in 2006, when it sought to buy a stake in IndusInd Bank Ltd, but later abandoned the plan
RBS Asset Sale
Those who are interested in RBS’s assets iclude ANZ, Standard Chartered, HSBC, and a host of state-owned Chinese banks. The sale of RBS assets would include ABN AMRO Bank India, which it acquired in 2007. ABN AMRO India is wholly owned by RBS and has around 3,000 employees in its three main divisions – retail and commercial business, global banking and markets (GBM) and manufacturing or outsourcing.
Mint reported today, quoting RBI officials, that “ANZ has overtaken StanChart and DBS Group Holdings Ltd, Singapore’s largest bank,” in the race to aquire the Indian assets of ABN Amro. Apparently, all three banks have discussed plans for the acquisition with the Reserve Bank of India (RBI). And ANZ has n upper hand since RBI is “comfortable” with ANZ making the purchase, reports Mint.
ABN AMRO’s private banking has around $1 billion under management. ABN AMRO has 31 branches in 21 cities in India involved in the retail business. The portfolio sale is expected to fetch RBS around $100 million.
RBS has announced a global restructuring plan according to which the bank will reduce its presence in 34 out of the 56 countries it is present in. The reduction in operations would mostly be on the retail side.
RBS’s retail, SME and the private banking businesses in India are on the block, despite the UK government’s approval to a historical bailout package through which the government is expected to add up to £25.5 billion to the bank as fresh capital. In return of the package, RBS has agreed to lend up to £25 billion in the local UK markets in terms of both loans as well as mortgage.
Australia and New Zealand Banking Group Ltd Chief Executive Mike Smith on Monday hinted at the bank’s interest in the Royal Bank of Scotland’s Asia units, though he was careful to avoid confirmation of a bid.
“Well, I think it’s too soon to say that because we have not seen any details. Obviously we do want to grow our business in Asia, so if there is the right opportunity, we will look at it,” Smith told Reuters on the sidelines of a conference here.
Asked if he was going to have a look at RBS’ Asia businesses, Smith said “Never say never.”
Sources told Reuters late on Sunday that ANZ hired Credit Suisse for a potential $2 billion bid for RBS’s Asian operations. Smith said the reports of hiring Credit Suisse was “market speculation.”
But Smith’s drive to expand ANZ across Asia are well known, and RBS units could be an excellent fit, as the troubled UK bank seeks to sell assets to raise money amid staggering losses and heavy government support.
Buying up RBS assets in Asia would be a positive step for ANZ, said Jack Chemello, banking analyst at BT Investment Management.
“It would obviously be a significant step for them. It would buy them some pretty attractive retail banking networks, and gain them significant exposure to affluent and high networth retail clients across the region,” Chemello said.
“But really, it all comes down to capitalisation and the price they pay for it.”
Separately, ratings agency Moody’s Investors Service downgraded to negative the ratings outlook for ANZ and two other Australian banks because of the potential impact of the economic downturn.