RBS to shut down Indian operation after deal to sell it to HSBC collapses

Taxpayer-controlled Royal Bank of Scotland is to wind down its operations in India after a deal to sell the business to HSBC struck two years ago collapsed.

It would have seen HSBC pay some £59m over the net book value of RBS's Indian business, which has gross assets of £190m.

The official line from both sides yesterday was that the transaction had become hugely complex and dragged on for so long that both sides agreed to give it up.

But sources close to the deal suggested that it had become bogged down in red tape and regulatory issues.

The Indian business, which was profitable, has 31 branches and services 400,000 customers. In the nine months to September it generated revenues of £42m.

The bank said that as part of chief executive Stephen Hester's strategy to exit non-core businesses it would now put India into an orderly wind-down.

The breakdown comes after a sale of 316 RBS branches to Santander for £1.6bn collapsed in October.

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