Tuesday May 18, 2010

Talks still on for sale of RBS assets

No target date for proposed disposal to materialise, announcement in due course

KUALA LUMPUR: Talks on the proposed disposal of The Royal Bank of Scotland’s (RBS) retail and commercial (small and medium enterprise) banking businesses in Malaysia and some Asia-Pacific countries are still ongoing, according to global banking and markets chief executive officer for Asia Pacific John McCormick.

However, the RBS group had not set a target for the proposed sale to materialise, he said, adding that bank would announce it in due course.

“It is a very complex transaction. We will announce it when everything is finalised,” he told a press briefing yesterday.

John McCormick ... ‘It’s a very complex transaction.’

RBS plans to hive off its retail and commercial business in the Asia-Pacific to help free up capital for the group to continue investing in future businesses.

In Malaysia, McCormick said RBS had strong global banking and markets (GBM) operations as well cash and trade finance businesses which now made up 95% of its revenue.

Going forward, the banking group would focus on wholesale banking for large corporates, financial institutions and government bodies.

GBM business in the Asia-Pacific accounted for about 15% of RBS’ worldwide GBM business last year and RBS expected the figure to exceed 20% annually in the next two to three years, he added.

The bank hoped to achieve this by, among others, enhancing its debt market capabilities, equity business, derivatives as well as its structured products business.

McCormick could not comment on Malaysia’s contribution to the Asia-Pacific region in terms of the GBM business but said it was an important market for the group in the region.

He said RBS’ niche differentiator compared with other foreign investment banks in the region was the strength of its onshore capabilities in terms of trading in bonds, currency, swaps and derivatives as a result of the group’s acquisition of ABN Amro a couple of years ago.

To a question on RBS’ role in Islamic finance and whether it would pursue it further, McCormick said RBS had slowed its foray in this segment but not stopped due to internal challenges in the last few years. The group saw strong growth in this area and was watching developments in the industry very closely, he added.

The Royal Bank of Scotland Bhd country executive Andrew M. Sill said the bank would continue to play an active role in the debt market in Islamic finance.

“We have brought a number of issuers to Malaysia in the past for Islamic bond issues and will continue to play an active role for both our Malaysian and foreign clients,” he said.

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