Job cuts loom as RBS to shut Indian branches, only 8 hubs to remain

Royal Bank of Scotland, which failed in getting the RBI’s approval to sell its Indian retail and commercial banking businesses to HSBC, has decided to shut 23 of the 31 branches in the country as part of a restructuring, media reports said.

The bank will have only eight hubs, namely Delhi, Mumbai, Chennai, Kolkata, Bangalore, Pune, Hyderabad and Vadodara. The shutdown will start with closure of Agra, Jodhpur, Jalandhar, Kolhapur, Mangalore, Shastri Park (Delhi) and Udaipur branches, media reports said.

“(This will be) followed by consolidation or closure of the other branches that are not part of the eight business hubs,” a Mint report quoted the bank as saying. It added that the branch consolidation will be complete by December.

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“RBS Group will maintain a predominantly deposit-led general banking presence alongside its international banking business,” an Economic Times report quoted from the bank statement.

There will be no change in its corporate and institutional business or its private banking businesses in India.

According to the report, the move will result in job cuts. The bank has about 500 executives in India.

The ET report estimates the bank’s retail and commercial assets to be worth Rs 3,000 crore, and IndusInd Bank, Standard Chartered Bank and Axis Bank are interested in buying these.

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India accounts for only a 0.02 percent of global business of RBS, the report said.

In July 2010, RBS, which is in financial stress after the global economic crisis of 2008, agreed to sell the Indian retail and commercial banking assets to HSBC for 63 million British pounds. It had also agreed to pay 90 percent of any losses made by the Indian unit in the following two years. According to this report, this meant that RBS would have ended up paying HSBC to buy the unit.

However, the deals did not fructify as the RBI was not in favour of transferring the ownership all the RBS branches to HSBC.

After the failure of the deal, RBS had said that it would restructure its Indian operations.