HSBC has dropped plans to acquire Royal Bank of Scotland’s (RBS’s) Indian retail and commercial banking businesses.
The deal is said to have been called off due to unfavourable terms on branch absorption and valuations.
RBS, which had announced the sale to London based HSBC for an undisclosed sum in July 2010, will now wind down the unit.
An agreement on the transaction, “has expired as the long stop date of November 30, 2012, has been reached without all conditions required to close the transaction being satisfied,” a release from HSBC said.
An HSBC spokesperson declined to comment further.
Media reports had suggested earlier that the transaction was on the rocks after the Reserve Bank of India did not let HSBC acquire majority of RBS branches in India.
The acquisition of the branches would have strengthened HSBC’s network in the country, which stood at 50 branches. RBS had 31 branches in India.
RBS earlier dropped a planned sale of its Indian institutional and investment banking businesses to Malaysia-headquartered banking major, the CIMB group. The deal was called off in July.
The India retail and commercial business is less than 0.5% of the RBS Group’s remaining non-core assets, according to a statement by RBS.
“RBS will continue to wind down the retail and commercial business in India in an orderly way and is exploring options for this. It will also reduce the loan portfolios in line with the stated Group policy of running down non-core assets. There will be no immediate change for customers who will continue to be served as they are today and will be notified of any changes impacting them in a timely way and to minimise disruption,” it said.