The deal is subject to regulatory approvals. Until ownership of the loans is transferred to te Hinduja-promoted IndusInd Bank, day to day management of the loan portfolio will remain with Royal Bank of Scotland N.V. (RBS) employees within diamond and jewellery clients in India will also move to IndusInd Bank Ltd and will ensure seamless transition of the customer base.
“IndusInd Bank enters into an agreement to acquire Royal Bank of Scotland's (RBS) Diamond & Jewellery Financing business in India; simultaneously enters into Partnership Agreement with ABN AMRO Bank N.V. for cooperation in Diamond & Jewellery Financing,” the bank said in a statement on Friday.
The statement added that this is part of ABN AMRO Bank NV’s diamond & jewellery clients [unit] that is housed in RBS NV acting through its Mumbai branch in India and the diamond and jewellery financing loan book of RBS is approximately Rs. 4,500 crore in size.
“This acquisition fits nicely into our strategy of creating scale with profitability in select business segments. We like this business and have a deep insight into the industry. We are also happy to reach a Partnership Agreement with ABN AMRO Bank NV, one of the oldest banks in Diamond and Jewellery financing,” said Romesh Sobti, MD & CEO, IndusInd Bank.
ABN AMRO was acquired by RBS in 2007. Moreover, before taking over as IndusInd CEO and MD, Ramesh Sobti was country head at ABN AMRO.
IndusInd Bank specialises in the diamond and jewellery financing business and this acquisition will enhance its position, IndusInd said. "Several members of IndusInd Bank’s senior management had been associated with this portfolio in RBS NV and prior to that in ABN AMRO Bank NV…A critical success factor in diamond financing is global client knowledge and this is being achieved through a long term Partnership Agreement with ABN AMRO Bank. This strategic relationship will facilitate deeper industry and client insight and in turn lead to improved client servicing, enhanced revenue opportunities and better risk management,” the bank statement further said.
RBS has been trying to exit its operations in India since its UK-based parent went into a government bailout after the 2008 global credit crisis.
After the RBI spiked a deal to sell its retail banking business to rival HSBC in 2012, RBS had said it would wind down its business gradually.
In August 2013, RBS had sold its credit card business, mortgage and commercial banking portfolios to mid-sized private sector lender Ratnakar Bank.
At present, RBS has just 20 branches in 10 cities across the country and retains its presence in the wholesale business and offers financing, risk management, investment banking, cash, payments, trade finance and wealth management solutions to its clients.
Source : Thehindubusinessline