HONG KONG (Reuters) - Asia-focused Standard Chartered is in talks to purchase banking assets in China and India owned by the Royal Bank of Scotland (RBS), a source with direct knowledge of the matter said on Wednesday.
StanChart's pursuit of the units comes as RBS tries to wrap up the sale of its retail and commercial banking divisions in Asia. ANZ, Australia's fourth-largest lender, is also considered a leading contender for some of RBS's Asian assets.
The initial plan was to sell the entire group to one buyer for at least $2 billion. But that effort failed, and the process is now focused on selling various parts to separate buyers, sources involved with the process say.
None of sources wanted to be identified because of the sensitivity of the negotiations.
"The one issue is that you do have multiple regulators involved and, at least in the case of India, this has made life difficult for this transaction," said Brian Hunsaker, banking analyst at Fox-Pitt Kelton in Hong Kong.
"I don't know how attractive these assets really are. A lot of these are the old ABN AMRO business. I don't necessarily think they were particularly strong in Asia in commercial banking," Hunsaker added.
The asset sale is vital for RBS to shore up its balance-sheet after the bank was bailed out by the British government, which owns 70 percent of the banking group. RBS seeks to exit from or shrink its operations in up to 36 other countries.
Asia-focused StanChart has weathered the financial crisis better than most rivals and its planned acquisition may be a sign it wants to become a bigger player in China and India. RBS's India business is considered the crown jewel.
ANZ EYES SOME ASSETS
ANZ said in May that it had submitted a non-binding bid for the RBS assets and had raised A$2.5 billion ($2 billion) in a share sale to fund the acquisition and strengthen its balance sheet.
ANZ is in talks to buy RBS units in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia, according to a Bloomberg report. The report said StanChart was eyeing the RBS Malaysian assets too.
"We are well advanced with the sale process. However, due to regulatory constraints and the confidentiality of the process we will not be commenting on any individual bidders or elements of the transaction process until its completion," RBS spokeswoman Yuk Min Hui said in an emailed statement on Wednesday.
The Asian assets for sale include 28 branches in India, where RBS has more than 1.3 million customers; 20 in Indonesia, where it has the largest foreign-owned bank network; and 17 in Taiwan, serving over 1 million customers. RBS has 13 branches in China.
RBS is likely to fetch close to $1 billion from the sale of its Asian assets, less than the $2 billion that had earlier been expected, Reuters has reported.
Cazenove UK analysts said in a report last week RBS's sale of its retail banking activities in Asia is technically challenging and they expect RBS may get proceeds of less than $1 billion.
The three main contenders for the Asia assets have been ANZ, HSBC Holdings and Standard Chartered. It was not clear on Wednesday where HSBC stood in the process. The bank could not be reached immediately for comment.
"We have already earlier this year said publicly that we were involved in that process, but the outcome at this stage is unknown," ANZ spokesman Kevin Foley said on Wednesday, adding that ANZ is still in talks with RBS.
(Additional reporting by Saeed Azhar in Singapore)
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