ABN Amro Bank which is a part of Royal Bank of Scotland (RBS) has decided to wind up its personal loan and credit card business in India. The bank plans to focus more on retail deposits, wealth management and corporate banking.
"As part of our regular review of the products and services we provide, in line with many other banks in India, we made a decision earlier this year to discontinue the issuance of fresh credit card or unsecured loans," an RBS spokesperson said.
"We continue to maintain our service for existing card and loan customers and remain focused on the branch banking and wealth management businesses in the retail arm of the bank."
The bank has declared that it does not require the services of many employees in the credit card and personal loan segment.
"The book size of the consumer finance division has almost been halved-from Rs2, 300 crore to Rs1, 200 crore. The plan is to shrink it to around Rs190 crore," an executive at ABN Amro Bank said.
The Indian operations of the bank which was sold off to RBS in 2007 has seen a decline in profits by as much as 93 % from Rs280.99 crore in the previous fiscal to Rs19.39 crore in the year ended 31 March, 2009.
The consumer banking operation of he bank, which has been put up for sale, showed an operating loss of Rs230.77 crore last year.
As a measure to make up for the losses incurred, RBS is selling off businesses termed as non core to selected markets in order to raise funds. On the other hand, it plans to expand the corporate and wholesale banking segments of ABN Amro.
RBS had declared its sale off plans in February 2009. Morgan Stanley is acting as the advisory in this process.
It is speculated that the prospective sale of assets to HSBC Holdings Plc may not materialize. RBS had earlier had talks with Standard Chartered Plc and Australia and New Zealand Banking Group Ltd (ANZ).
Standard Chartered had put down the deal citing reasons of poor asset quality and over valuation. ANZ had to forgo the deal on account of commercial and regulatory uncertainties.
Financial year 2008-2009 was a rough span for foreign banks in India, on account of the economic downturn which caused a rise in non-performing loans. But no other foreign bank saw a dip in profit.
Other foreign players like Standard Chartered Bank showed12% growth in net profit in India; HSBC's net profit increased by 8%; and that of Citibank NA and Barclays Bank Plc's India operations rose by 20% and 485%, respectively.