DBS to take over some RBS banking businesses in China

DBS Group Holdings, Southeast Asia’s biggest bank, said it will take over Royal Bank of Scotland Group’s retail and commercial banking businesses in China.

Royal Bank of Scotland (RBS) will transfer close to 25,000 clients in Shanghai, Beijing and Shenzhen to DBS China, Singapore-based DBS said in a statement today. DBS didn’t spend any money on the deal, Melvin Teo, chief executive officer of DBS China, said at a news conference in Shanghai.

DBS CEO Piyush Gupta, seeking to lift a stock that’s trailed rivals in 2010, said last month he plans to improve return on equity by building businesses that cater to wealthy individuals and small companies, and by expanding in China, India and Indonesia. For RBS, the deal is part of asset disposals following a government bailout and record losses.

“There’s a bit of momentum there for selling fringe assets,” said Mike Trippitt, a London-based analyst at Oriel Securities who has a “buy” rating on RBS. The deal “is good in terms of sentiment,” he said.

Singapore-based DBS aims to generate about 40 per cent of revenue from the city state in five years, down from about two- thirds now, according to a plan unveiled in February. Greater China would make up 30 per cent, DBS has said. South Asia and the rest of Southeast Asia may contribute another 30 per cent.