RBS feels lure of China but rules out Standard Chartered bid

The Royal Bank of Scotland, Britain's second-largest bank, ruled itself out of bidding for Standard Chartered but said that it is looking at opportunities to expand in China.

The Royal Bank of Scotland, Britain's second-largest bank, ruled itself out of bidding for Standard Chartered but said that it is looking at opportunities to expand in China.

Speaking ahead of RBS's annual shareholder meeting in Edinburgh, Sir George Mathewson, the chairman, said yesterday the bank had looked at Standard Chartered, the London-listed emerging markets bank, but added: "We feel that's not the way we should go."

Some analysts had suggested that an acquisition of Standard Chartered would give RBS the desired foothold in the Far East.

Sir Fred Goodwin, the chief executive, said: "We're having a further look in Asia generally. It is self-evident why we would do that" to tap into Asia's rapidly growing markets. He added that "it would be almost remiss" not to consider acquisitions in China.

Bank of China, the country's second-largest bank, has confirmed that it is in talks with 10 Western banks, including RBS, about selling stakes to them ahead of its flotation. But Sir Fred refused to comment on reports that RBS is looking to take up a stake of up to 20 per cent in the Chinese lender for $4bn (£2.1bn).

He reiterated that the UK bank is interested in joint ventures for certain financial products, which would not necessarily involve taking a stake in a Chinese bank. "I can imagine joint ventures where it would be desirable to have a stake and ones where it would be unnecessary," he said. So far, RBS has mainly expanded in the US and is still digesting last year's $10.1bn (£5.3bn) purchase of Charter One. Some analysts have questioned the logic of expansion into the Far East, where RBS has little expertise. Worries that it might do an expensive deal there that lacks strategic rationale have weighed on the bank's shares.

At the shareholder meeting, attended by about 260 investors, China hardly featured. Only one shareholder raised the issue. Sir George replied: "It is impossible to properly assess opportunities without speaking to people involved in the country concerned; and that is exactly what we have been doing in relation to China."

Sir Fred is thought to want to build RBS, currently the sixth-biggest bank in the world, into a group that could rival the financial giant Citigroup.

Though the meeting lasted only an hour and a half, it was not all plain sailing. Private shareholders criticised the bank's new bonus scheme for Larry Fish, the head of the its Citizens subsidiary in the US; 70 executives will benefit from an incentive plan, which will pay out between $14m and $28m to them over the next three years. Depending on Citizens' performance, Mr Fish could get a bonus of up to four times his salary. That makes him the highest-paid executive at RBS.

Last year, Mr Fish received a total pay package of £2.3m, including a £1.6m.

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