Britain’s state-owned bank Royal Bank of Scotland is reported to be in talks to sell its private banking unit in India to Sanctum Wealth Management.
RBS has signed a non-binding agreement and continuing its discussions with the Sanctum Wealth, said a RBS spokesperson in an emailed statement to Business Standard.
However, the financial details of the deal are yet to be disclosed.
Currently, the bank is carrying out private banking business in the country through its four offices in Mumbai, New Delhi, Bengaluru and Chennai.
Shiv Gupta, the current managing director for RBS’ private banking operations in India, will head the Sanctum, the spokesperson said.
“This arrangement would ensure continuity for clients and establish a framework to take the business forward,” said the statement.
Gupta could bring in a few private investors to Sanctum Wealth after the transaction is fully completed, a source close to the development, told Reuters.
The latest move to sell its private banking business is a part of RBS’ decision to pull out of Indian market, as its looks to focus on consolidation in the home market.
“This marks another step towards delivering the strategy to make RBS a stronger, simpler, more sustainable business, more aligned with the needs of our customers in the U.K. and Western Europe,” the statement said.
RBS, the largest state-owned bank in Britain, had sold its retail and commercial banking business in India in 2013. Since then, the bank has been trimming its presence in the country and sold its bullion financing business to IndusInd Bank recently.
The bank saw its net balance sheet exposure in India decline to ?1.7 billion in the financial year 2014, from ?2.0 billion in the previous year. The fall in exposure was due to a cutback in corporate lending.
Nevertheless, RBS is expected to continue its back-office operations in India. The bank had moved 60 back-office positions from the UK to India earlier in 2015.
A few years ago, many overseas wealth managers rushed to set up shop in India, on the hopes that the country’s strong economic growth would give a boost to their business.
But fierce competition, high employee costs and weakening markets have weighed on the revenues of the private banks besides tighter regulations hampering their product offerings.
In 2013, another foreign bank Morgan Stanley was forced to sell its India wealth management unit to Standard Chartered due to similar reasons.