Mumbai, Apr 2: Royal Bank of Scotland (RBS) today said it has reached an agreement with Malaysian financial services major CIMB Group to sell its cash equities, equity capital markets and mergers and acquisition business in India as well as in 10 other Asia-Pacific markets for around 75 million pounds (USD 120 million).
According to the English lender, cash equities businesses in India, Australia (excluding the interest in RBS Morgans), China, Hong Kong, and Taiwan, including the cash equities sales desk in the US and Britain, will be sold to the CIMB Group.
Similarly, RBS will exit equity capital markets and M&A businesses in India, Australia and China (excluding activities carried out by Hua Ying Securities), Hong Kong, Indonesia, Malaysia, Singapore, Taiwan and Thailand.
RBS had entered into an agreement with HSBC India to sell its retail banking business way back in 2010, but is yet to yet to get the Reserve Bank nod for the same.
“The principal benefit of this sale to RBS is to mitigate partially the shutdown costs otherwise associated with these businesses. The cash consideration, based on net asset values, is expected to be circa 75 million pound,” the bank said in a release.
While the transactions are likely to be completed by the fourth quarter of 2012, it will depend on regulatory approvals in certain countries, it added.
About its future business plan in these regions, the bank said it will continue in debt financing, risk management and transaction services businesses.
“In Asia Pacific, RBS will maintain leading positions in debt financing, risk management and transaction services in the 11 countries where it currently operates,” it said.
The agreement is in line with the bank's announcement on January 12, 2012 to exit from cash equities, corporate banking, equity capital markets, and M&A businesses as part of its wholesale banking operations.
RBS Group Finance Director Bruce Van Saun said, “we are pleased to reach agreement with CIMB on the transfer of these businesses over the course of this year. With this transaction, we have now completed the sales process for various elements of the businesses we designated for exit in January.”
Meanwhile, CIMB Group, Malaysia's second-largest financial services provider, said the pact would help increase its footprint in the Asia-Pacific region.
“Top tier international investment banking is an important extension to the CIMB Group's Asean universal banking platform. The CIMB has expanded investment banking franchise, enabling us to assist investors and businesses who want to move in and out of Asean or across Asia Pacific as a whole,” Group Chief Executive Dato Sri Nazir Razak said.