IndusInd Bank to buy RBS jewellery financing business
Mumbai: IndusInd BankLtd will buy the diamond and jewellery financing business of Royal bank of Scotland Plc in India which has a loan book worth some Rs.4,500 crore, IndusInd said in a statement on Friday.
The deal is subject to regulatory approvals. The portfolio will be managed by RBS until ownership of the loans is transferred to IndusInd.
"This acquisition fits nicely into our strategy of creating scale with profitability in select business segments," IndusInd Bank's chief executive officer Romesh Sobti said in the statement. "We like this business and have a deep insight into the industry."
IndusInd specializes in diamond and jewellery financing and this acquisition will enhance its position, said the bank.
RBS' diamond and jewellery is a legacy of the erstwhile ABN Amro Bank NV, the Dutch bank bought by a consortium of three lenders led by RBS in 2007. The Indian operations were taken over by RBS. IndusInd's senior management including Sobti were part of the undivided ABN Amro.
This also played a part in the acquisition, IndusInd said.
"This deal has been in the works for three to four months. Diamond is a big business in India and our portfolio is smaller at Rs.1,500 crore. We also have an agreement with ABN to share information, knowledge and risk management about this business which is crucial for this business. This is a clean portfolio and ABN has also signed a five-year non-compete agreement," Sobti said in an interview.
This is the first business being offloaded by RBS in India, which has started winding down operations across a number of locations. Sobti said this deal has no link to RBS shutting down operations in India because it was envisaged earlier.
On 25 February, RBS said it would shut operations in India and 24 other countries as a way to cut costs and improve returns to shareholders. The bank's businesses in India will be wound down or put up for sale, Mint reported on 26 February.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.