RBS is fully committed to support impacted customers: Madan Menon

Q&A with Co-Head of Markets & International Banking, Asia Pacific, RBS

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Royal Bank of Scotland (RBS) has recently signed an agreement to sell its credit card business, mortgage portfolio and business banking business for smaller corporates to Ratnakar Bank, one of India’s fast growing private sector banks. Madan Menon, Co-Head of Markets & International Banking, Asia Pacific, RBS tells Neelasri Barman in an interview about the way forward. Edited excerpts:

Earlier this month you entered into an agreement with Ratnakar Bank. Can you share the details about the deal?

RBS in India has signed an agreement to sell its credit card business, mortgage portfolio and business banking business for smaller corporates to Ratnakar Bank subject to approval from the Competition Commission of India (CCI). This is in line with our plans for retail and commercial Banking update that we had announced in November 2012. The deal comprises over 1.2 lakh retail customers and Ratnakar Bank also plans to absorb the employees of RBS associated with these businesses.

There is no impact on RBS’s wholesale banking, markets and international banking or its private banking businesses in India. RBS will continue to offer financing, risk management, wholesale and investment banking, cash, payments, trade finance and a comprehensive range of wealth management solutions to its clients. RBS in India is also a major business services hub for the RBS Group.

Ratnakar Bank will absorb all the employees of your retail business?

Ratnakar Bank plans to absorb all RBS employees associated with the business. Part of the agreement and one of the most relevant parameters for which Ratnakar Bank was chosen was because they will absorb most of the employees on no less favourable terms than they were employed in RBS. The deal also comprises transfer of 1.2 lakh customers. RBS is fully committed to support impacted customers and will be writing to inform on the next steps for them.

By when do you expect various permissions to be in place for reshaping your retail business?

The reshaping of our retail business is part of RBS's three-year old plan to exit from its retail and commercial business that does not form part of its regional growth strategy. It is going as per our plans and is well on track. It is expected to be completed by December 2013 and at this point of time we do not see any roadblocks. By the end of 2013, we will maintain a retail banking presence in 10 locations across the country namely, Bengaluru, Chennai, Delhi, Gurgaon, Hyderabad, Kolkata, Mumbai, NOIDA, Pune and Vadodara.

Is the sale of the retail business to Ratnakar Bank made at deep discount?

It is a fair transaction. Both banks have excellent synergies and our objectives like future of the business, its execution, the quality of counterparty was met.

There was also a part of business which you had planned to sell to Malaysia's CIMB Group Holdings in India. What happened to that business?

We announced on 12 January 2012 that the strategic priorities for our wholesale bank is to focus on our core strengths in fixed income, across rates, currencies, asset backed products, credit and debt capital markets, risk management solutions, and transaction services. As part of the strategic plan, on 2 April 2012, RBS announced it had agreed to sell some of its cash equities, equity capital markets and mergers and acquisitions businesses in Asia Pacific to CIMB Group. However, In India, despite our best efforts, we will not be able to complete the proposed divestment in India to CIMB.

What is the way forward with the existing businesses?  

Our focus continues to be to deliver value to our chosen clients with the relevant product propositions we offer across the RBS Group. RBS has the advantage of having a vast network in 38 countries across the world. There are only 5-6 global banks that have his capability and global reach. As mentioned earlier, India remains a fundamentally core market for us and we are focused on our markets,international banking and private banking businesses in the country. Additionally, technology is playing a big part in our business offerings. We are delivering innovative products using the latest technology offerings to our clients. It is enables us to deliver our unique proposition and products like the 'remote cheque scanning' solution using the ‘cheque truncation system’ that provides instant credit on cheques to our clients anywhere in the country. We continue to grow our client base by helping Indian corporates expand abroad and also enabling global companies that are coming to India.