Discussions on to sell assets of ABN Amro Bank, says RBS

Royal Bank of Scotland is talking to bidders for selling the retail and commercial banking operations of ABN Amro Bank in the country, amid reports that talks with Standard Chartered Bank failed over valuation of the assets.

"RBS is in ongoing discussions with bidders for the remaining assets it has decided to sell in Asia and will make further announcements, as appropriate, in due course", said a spokesperson of ABN Amro Bank, which was acquired by RBS in 2007.

Besides Standard Chartered Bank, London-based HSBC and Australia-based ANZ Bank had expressed interest in buying ABN Amro's assets.

Following the acquisition of ABN Amro Bank, RBS had decided to sell the retail and commercial operations in Asia.

ABN Amro, according to RBI data on comparative performance of banks, did not do well on various parameters as compared to other major foreign banks operating in India.

Attributing poor performance to extraneous factors, ABN Amro Bank said, "As experienced across the banking sector in India, the profitability of our consumer finance business during 2008 was adversely impacted by extremely challenging market conditions".

RBS, the spokesperson further said, "has taken a number of steps over the last 18 months to actively manage the situation".

Among the important performance parameters, ABN Amro during 2008-09 witnessed a sharp decline in profit per employee to Rs 0.62 lakh from Rs 7.66 lakh in the previous year.

However, unlike ABN Amro, other major foreign banks did well with Citibank reporting profit per employee of Rs 45.12 lakh during 2008-09, followed by Standard Chartered Bank at Rs 23.82 lakh and HSBC at Rs 16.06 lakh.

The business per employee figure, which is an indicator of the efficiency and productivity, slipped to a dismal level in 2008-09 to Rs 0.62 lakh for ABN Amro, significantly below the average of Rs 24.78 lakh recorded by 30 foreign banks operating in the country.

Besides, low per employee profitability, ABN Amro Bank also witnessed sharp increase in its net Non-Performing Asset (NPA) ratio, suggesting a sharp spurt in bad loans.

The net NPAs of the bank rose to 2.2 per cent of its assets in 2008-09 from 0.85 per cent, which is only a shade better than the crisis-ridden Citibank.

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