RBS strategy puts focus on HK, mainland
Troubled Royal Bank of Scotland Group says it will give priority to the mainland and Hong Kong in its new Asia-Pacific development strategy even if it is selling a substantial part of its operations in the region.
RBS chairman Philip Hampton yesterday clarified that the bank was not receding from China even as it was putting up its retail banking and small and medium-sized enterprise businesses for sale. Instead, it has ambitions for further development.
'We will focus on wholesale banking and investment banking, where our strength rests. In the Asia-Pacific area, we will give top priority to [the mainland] and Hong Kong,' Mr Hampton said in Beijing.
Speculation has been rife since January that RBS may have to retreat from the region and focus on its troubled home market after the British government injected more than ?0 billion (HK$440.13 billion) to bail the bank out.
In January, RBS sold its entire 4.3 per cent stake in Bank of China, its only strategic partner on the mainland, to raise HK$18.48 billion because of financial pressure amid the global financial crisis.
'Our relationship with Bank of China is warm, friendly and commercial,' said John McCormick, RBS' chief executive for the Asia-Pacific.
In the British bank's first official comment on the relationship since the strategic partnership was ended, Mr McCormick said the two banks 'have a close relationship' and 'are actively finding ways to do business together'.
He said RBS executives met Bank of China chairman Xiao Gang yesterday and visited officials of the China Banking Regulatory Commission.
Although it is selling its retail and SME banking services on the mainland, Hong Kong and elsewhere in Asia, RBS says it will focus on those two markets in its new strategy.
On the mainland, it will expand foreign exchange, interest rate, equities, commodities, derivatives and other financial product services to companies and financial institutions, as well as help firms go offshore and gain access to global capital markets.
It is also interested in advising the Chinese government, the holder of almost US$2 trillion of foreign exchange reserves, on debt, options and other markets to manage risk and arrange investments.
Hong Kong, as a regional financial hub, would be a 'key component' of RBS' strategy, Mr McCormick said.
'The businesses we are selling only accounted for 25 to 30 per cent of our income in the region last year,' he said, adding it was closing businesses in New Zealand, the Philippines, Vietnam and Pakistan, shrinking them in South Korea, Malaysia, Indonesia, Taiwan and Thailand, but was seeking to grow and develop its presence in China.
The 'core' countries and regions are the mainland, Hong Kong, Singapore, Japan, Australia and India.
Mr McCormick did not name potential buyers of the assets but said they included those keen to enter the Asia-Pacific market, consolidating their operations in Asia, and those intending to re-enter the market.
The South China Morning Post reported last month the Australia and New Zealand Banking Group was preparing to bid for the Asian operations of RBS, possibly for as much as US$3 billion. The deal would include the bank's Hong Kong and mainland units, which employ 1,400 people, sources said.
Standard Chartered, which may also be interested in some RBS operations, was believed to be still examining a potential bid internally, the sources said.
RBS had sent interested parties a detailed 'information memorandum' outlining exactly what was for sale, Mr McCormick said.
Market sources said the brochure was likely to be sent to ANZ, Standard Chartered, HSBC, Industrial and Commercial Bank of China and Bank of China. Bank of Communications is unlikely to get involved, as it has a joint venture with HSBC.
RBS acquired its Asian retail and commercial banking operations as a result of the 2007 ABN Amro deal, which enhanced significantly its investment banking presence.
