Published March 19, 2009

A chunk of RBS banking business up for grabs

Its Singapore retail and commercial banking business is now in search of a buyer

By SIOW LI SEN

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(SINGAPORE) Troubled Royal Bank of Scotland is selling its retail and commercial banking business in Singapore, and 660 jobs could be at stake.

Mr Hampton: 'It's early days yet, we expect a significant level of interest from serious banks.'

The semi-nationalised British bank will retain its investment banking and wholesale business in Singapore, said RBS chairman Philip Hampton yesterday. Also not for sale is its private bank, RBS Coutts, which has its global headquarters in Singapore.

Appointed RBS chairman last month, Mr Hampton is on a whirlwind trip to Asia to reassure customers of RBS's commitment.

Singapore is the global and regional hub for RBS's back room operations, providing support for global banking and markets. It is also the regional hub for other activities, including credit risk management and global transaction services.

RBS currently has 2,368 people in Singapore, including 260 at RBS Coutts. Of this, 660 is from retail and commercial.

In 2007, RBS acquired ABN Amro in the most expensive banking takeover ever to expand its Asia business. But the results of the takeover were disastrous and last month, the group announced a pullback after a strategic review.

Before the integration, ABN Amro had a staff of 1,500, and RBS, 900 in Singapore.

RBS, now 68 per cent owned by the UK government, is selling its retail and commercial banking business in eight markets because of capital restraints. In Singapore, its retail and commercial banking segment includes wealth management, unsecured loans and SME lending.

Last month, RBS posted the biggest loss in British corporate history at a staggering £24.1 billion (S$52 billion).

Besides Singapore, the other parts of RBS up for sale are in Malaysia, Indonesia, Hong Kong, China, India, Taiwan and Pakistan. The sale of its Asian assets has been much speculated upon in recent months.

'It's early days yet, we expect a significant level of interest from serious banks,' said Mr Hampton on how the sale is going. He said that RBS would like to dispose of the eight markets as a whole but is also open to segmentation, like selling Singapore and Hong Kong if the buyer is only keen on those two businesses.

Asked if RBS is open to just selling its loan portfolios on a stand alone basis, John McCormick, RBS's chief executive, global banking & markets, Asia Pacific, said that it could be 'a number of permutations'.

Standard Chartered, HSBC and ANZ have been reported to show interest. Chinese banks which want to expand overseas have also been mentioned.

The three local banks have said that they are looking at expanding their businesses via organic growth, rather than via acquisitions.

Mr Hampton said that considering RBS's situation, staff morale is good.

'Our staff know our fundamental strength will be restored, I can say that of most big banks in the world, they don't disappear but they may change shape,' he said. 'Clearly it's not a short-term exercise to turn around. Somewhere in the next five years, RBS will be in much stronger shape.'

RBS has also managed to convince the UK government that bonuses will continue to be paid for the right people, he said. 'We make the argument and the UK government has accepted that bonus will still be paid, over a long period of time, in stock, to those who made profits,' he said.

As for the furore and 10 legal suits that the bank is facing over the £16 million pension payments to its previous chief executive Fred Goodwin, Mr Hampton quipped: 'I spend more time on Fred Goodwin than I would like to.'