RBS ready to sell $1.1bn loans to National Bank of Abu Dhabi
Royal Bank of Scotland (RBS) is said to be preparing to sell $1.1bn of loans to the National Bank of Abu Dhabi (NBAD), as part of the RBS's ongoing exercise of winding up most of its operations. The acquisition of these&nbsp;loans, which were given to Indian companies such as Reliance Industries, is in line with the NBAD's&nbsp;strategy of increasing their operations in India.
MUMBAI: Royal Bank of Scotland Plc. is poised to sell loans worth $1.1 billion given to Indian companies such as Reliance Industries and Vedanta to the National Bank of Abu Dhabi (NBAD) as it retreats from international banking to focus on the UK retail business, said two people familiar with the discussions."Negotiations between the two banks are underway and valuation of the portfolio is still being worked out," said one of the persons, neither of whom wanted to be identified. "NBAD is keen to take over $1.1 billion out of the $1.2 billion loan book." NBAD’s India chief executive officer Rajeev Pant did not respond to calls to his office.Edinburgh-headquartered RBS, majority-owned by the British government following its 45.5 billion pound bailout during the credit crisis in 2008, has been on an asset-selling spree. The banking group, which built its position in India through the acquisition of the Dutch ABN Amro franchise, is winding up most of its operations.The loans denominated in dollars were given to Indian companies by overseas lenders as external commercial borrowings (ECBs) and aren’t part of the local portfolio. The debt will be bought by the overseas branches of NBAD, which has been beefing up its operations in the country. Apart from Pant, it has hired senior investment banker Nilendu Mukherjee from RBS as part of its India plan.NBAD is the second largest commercial bank in the United Arab Emirates and the largest in Abu Dhabi. Acquiring the loans will give the bank exposure to top Indian companies, which are expected to perform better than many emerging market peers with the country’s economy expected to grow at more than 7 per cent.RBS has been selling its India businesses. It recently agreed to offload its private banking operations in a management buyout to Sanctum, led by its head of private wealth management business in India. This has assets of $2.5 billion. Earlier in the year, IndusInd Bank bought the Rs 4,500 crore diamond & jewellery financing business and related RBS deposits. The proposed loan transaction may be part of RBS’s global restructuring. It recently decided to refer thousands of its biggest customers to BNP Paribas SA for cash management and trade finance, Bloomberg News reported.RBS chief executive officer Ross McEwan is focusing on UK consumer and commercial banking and shrinking the investment bank to restore profit before the government begins a stake sale.The cash management operation, which is part of the securities division, isn’t considered "essential" because it doesn’t meet the lender’s profitability targets, according to the CEO. "In BNP Paribas, we have found a bank that has the commitment to work with our GTS customers," said Marc Townsend, head of global transaction services. "It has the people, country coverage, strong global product capability and infrastructure in transaction services to be an attractive alternative for our affected customers."