RBS' sale of Asian business hits hurdle, says WSJ report

The Royal Bank of Scotland's (RBS’) effort to complete the sale of its Asian business, including India and China, is facing hurdles and may fetch a smaller price than expected, says a media report.

Attributing people familiar with the matter, The Wall Street Journal said RBS’ effort to sell its Asian assets had hit some snags and could mean lesser price than the UK-controlled bank had expected.

Quoting people close to the matter, the report said, “The problems involve talks with UK- based Standard Chartered over commercial and retail businesses in China and India.”

According to people close to the matter, the daily noted, “Roth parties still hope to reach an agreement. RBS hoped to wrap up the talks by mid-summer.”

The China and India assets were valued in “low hundreds of millions” of pounds, the report said, attributing the remark to people familiar with the deal.

This means RBS could fall short of selling all the Asian assets at their initial valuation of 1-1.5 billion pounds.

The report said discussions for the Indian businesses had encountered some road blocks due to the difficulties surrounding licensing agreements in that country, as well as Standard Chartered’s concern about some risky, unsecured loan portfolios it could inherit.

Besides, citing one person close to the talks, the Wall Street Journal said Standard Chartered had some concerns about what would be included in the China businesses.

Chinese banking regulators also might be putting the brakes on the deal as a result of Standard Chartered's role in a controversy that erupted in Hong Kong involving sale of “minibonds” by banks, the daily said citing one of the people.

The assets under discussion are part of a group of RBS’ Asian businesses that were earmarked for disposal under the strategic plan of Chief Executive Stephen Hester, who is in the process of shrinking the troubled bank's balance sheet, the daily noted.

Many Asian businesses were acquired by RBS when it bought part of Dutch bank ABN Amro Holding NV in 2007 — a top-of-the-market deal that helped drive RBS to the brink of insolvency.