ABN Amro Bank NPAs shoot up near three times in FY'09

The India arm of global lender ABN Amro Bank, whose retail business is reported to be on the block, has recorded a near three-fold growth in bad loans during 2008-09.     

The net Non-Performing Asset (NPA) ratio — a pointer to the loans that are considered bad — of ABN Amro has gone up to 2.2 per cent of its assets suggesting that the foreign bank is just a shade better than the crisis ridden Citibank, the RBI data revealed.     

No response to queries on the bank's performance sent through e-mail could be obtained from either ABN Amro's Country Head Meera Sanyal or its spokesperson.     

Royal Bank of Scotland (RBS), which acquired global operations of ABN Amro Bank, is in advanced discussions with bidders for selling its retail and commercial banking businesses in certain Asian markets, including that of India.     

ABN Amro Bank's net NPA ratio, according to RBI, increased from 0.85 per cent in 2007-08 to 2.20 per cent during 2008-09, one of the highest among the 30 foreign banks operating in the country.     

Although ABN Amro Bank did not respond to the queries on reasons for sharp deterioration in its performance, the RBI figures reveal contraction in deposits and advances, which is considered as an indicator of decreasing confidence of people in the bank.

Among the major foreign banks, only Citibank, which is one of the worst hit banks in the global financial crisis, has a higher net NPA of 2.63 per cent.     

Among the comparable foreign lenders, Standard Chartered Bank, which is reportedly trying to take over the assets of ABN Amro Bank from its present owner Royal Bank of Scotland, has performed much better than many of its peers.     

The net NPA ratio of Standard Chartered Bank, as per the RBI data, was 1.37 per cent against 2.20 per cent of ABN Amro Bank and 1.80 per cent, the average NPA ratio of 30 foreign banks which are operating through a network of about 300 branches.     

ABN Amro Bank, which started operations in India in 1920 has 30 branches and employees about 3,200 persons in the country.     

Besides Indian operations, RBS is also looking at selling retail and commercial banking assets of ABN Amro Bank in Pakistan, China and Malaysia.     

"RBS remains in advanced discussions with bidders for the remaining assets it has decided to sell in Asia and will make further announcements, as appropriate, in due course," it had said in a statement earlier.

In February this year, RBS had said it would review options for the future ownership of Asia retail and commercial banking business in India, Pakistan, China, Taiwan, Hong Kong, Indonesia, Malaysia and Singapore. 

RBS, in which the British government has a majority stake, has posted a loss of 1.04 billion pounds for the first six months of 2009, bogged down by soaring bad debts.