RBS said to close India business by end of the year

Royal Bank of Scotland will reportedly close its banking operations in India after deciding against the sale of the division due to worries about red tape.

Strict regulations on the acquisition of banking businesses have led RBS to believe the process involved in selling its India business would cost too much and take too long to complete, the Financial Times reported on Monday.

The lender has therefore given up on finding a buyer for its India operation and concluded it would make more sense to close the business. The operation is expected to wrap up by the end of the year.

“You are in limbo,” explained one senior executive with knowledge of the matter, with reference to RBS’s position. “Every day, the value is eroding until it becomes cheaper just to close down the operation.”

The closure of the India business, which provides financial services to institutional and corporate clients, will involve the loss of about 700 jobs.

However, RBS will retain about 13,000 employees in India in back-office functions supporting other global operations.

Since its bailout during the 2008 financial crisis, the company has been selling down assets to focus on core strengths.

The lender disposed of operations in six Asian countries to Australia’s ANZ in 2009 but India assets were excluded due to worries about regulatory approval, sources told the FT.

RBS bought the India business through the 2007 purchase of ABN Amro.