Published February 21, 2009

RBS plans Great Asian Sale

Bank seeks buyers for Asian divisions; Stanchart, HSBC may be interested: sources

By NEIL BEHRMANN
IN LONDON

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THE Royal Bank of Scotland has hired Morgan Stanley to seek potential bidders for its Asian banking divisions, according to sources close to the discussions.

Asked to confirm the information, a RBS spokeswoman refused to comment. Part of the deal following the UK government's part-nationalisation via a purchase of a 70 per cent stake in the bank is the instruction that RBS should raise capital by selling assets around the globe. Asia is a key area, as RBS bought Asian units at the high price of £10 billion (S$21.9 billion) from ABN Amro as part of the biggest takeover in UK banking history. Since that deal, RBS has been under acute pressure. The bank is believed to also want to sell its Mid-West US commercial banking business, which was purchased in 2004.

RBS is believed to have approached Standard Chartered and Australia's ANZ about possible purchases of its Asian operations. HSBC recently indicated that it was also interested. According to The Independent in the UK, RBS is considering selling its retail banking operations while keeping its licences and wholesale banking businesses in Hong Kong, Singapore, Japan and India.

A deal in India with Standard Chartered, which is already the biggest international bank in the market, would allow it to do this. RBS's Indian business, bought as part of the ABN deal, is expected to be wanted by potential bank bidders because of restrictions on opening branches in the country. Standard Chartered has about 90 branches and would gain 31 more in 21 cities if it bought RBS's operations.

Since Asian economies are in a downturn, analysts are reluctant to price the potential sale of RBS's Asian assets. There will have to be considerable due diligence, they say, as some loans and assets could be suspect.

Shares of Standard Chartered and HSBC have fallen in recent weeks, mainly because of fears about the Asian economy. Stanchart is in a strong position as it recently had a rights issue and relative to other global banks, has a strong capital base. HSBC, with problems in the US, is expected to have a rights issue when the timing is right.

RBS has already announced that it will have to write down up to £20 billion (S$43.98 billion) on the pricey acquisitions during the credit bubble. Chief executive Stephen Hester, who took over from Fred Goodwin, will announce the results of a strategic review next Thursday, when the bank is expected to post a 2008 loss of up to £28 billion including the goodwill write-downs.

RBS, following the acquisition of ABN Amro, has a presence in 15 Asia-Pacific markets serving corporate and institutional clients, the spokeswoman said. The bank provides investment and transaction banking capabilities, as well as wealth management, retail and commercial banking. The international wealth management arm offers private banking and investment services to clients in selected markets through the RBS Coutts brand. The RBS Group operates in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

'Singapore is an important hub for the banking business in South-east Asia,' she said. RBS has an office at George Street and One Raffles Quay and also caters for European multinationals in Asia from its RBS Coutts office in Singapore Land Tower.