HSBC boosts Indian operations through RBS acquisition

HSBC, through its wholly owned subsidiary The Hongkong and Shanghai Banking Corporation Limited, has enterd into an agreement to acquire The Royal Bank of Scotland Group plc's retail and commercial banking businesses in India involving portfolios with a gross asset value of $1.8 billion as on 31 March 2010.

The acquisition, which is subject to regulatory approvals, is expected to be completed in the first half of 2011.

The total acquisition cost will comprise a premium of up to $95 million over the tangible net asset value of the businesses being acquired at the closing of the transaction, minus an adjustment equal to 90 per cent of any credit losses incurred on the unsecured lending portfolio in the two years subsequent to deal completion.

RBS's retail and commercial banking businesses in India currently have 1.1 million customer accounts, over 1,800 staff and 31 branches.

HSBC will apply to the Reserve Bank of India for branch licences required to support the acquired businesses.

''The main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of the world's largest and fastest growing developing markets in the last two years," Michael Geoghegan, HSBC Group CEO and chairman of The Hongkong and Shanghai Banking Corporation Limited,  said in New Delhi.