IndusInd Bank today entered into an agreement with Royal Bank of Scotland NV to acquire its diamond and jewellery financing business in India and related deposit portfolio, the lender said in a press release.
IndusInd Bank today entered into an agreement with Royal Bank of Scotland NV to acquire its diamond and jewellery financing business in India and related deposit portfolio, the lender said in a press release.
"This is part of ABN AMRO Bank NV's diamond & jewellery clients [unit] that is housed in Royal Bank of Scotland NV acting through its Mumbai branch in India," IndusInd said. "The Royal Bank of Scotland NV diamond and jewellery financing loan book is approximately Rs 45 billion in size."
ABN AMRO was acquired by RBS in 2007.
Until ownership of the loans transfer to IndusInd Bank, day-to-day management of the loan portfolio will remain with Royal Bank of Scotland NV. Employees within Diamond and Jewellery Clients in India will also move to IndusInd Bank Ltd and will ensure seamless transition of the customer base.
IndusInd Bank specializes in the diamond and jewellery financing business and this acquisition will enhance its position, IndusInd said. "Several members of IndusInd Bank's senior management had been associated with this portfolio in RBS NV and prior to that in ABN AMRO Bank NV."
A critical success factor in diamond financing is global client knowledge and this is being achieved through a long term Partnership Agreement with ABN AMRO Bank NV, the acquiring bank said. "This strategic relationship will facilitate deeper industry and client insight and in turn lead to improved client servicing, enhanced revenue opportunities and better risk management."
The acquisition has a connection with the past. Before taking over as IndusInd chief, Ramesh Sobti was country head at ABN AMRO.
"We used to do this business in the erstwhile ABN AMRO," Sobti said in an interview with CNBC-TV18 in an interview. "At IndusInd also, we have built up a portfolio over the last four-five years. If you combine these two portfolios, it gives us a nice dominant position in the diamond business."
Below is the transcript of the interview on CNBC-TV18.
Latha: I believe it is Rs 4,500 crore business?
A: The business varied between Rs 4,500-5,000 crore odd. This is a business, as you would know, right after our hearts. We used to do this business in the erstwhile ABN AMRO. ABN AMRO had tremendous expertise in running this business.
At IndusInd also, we have built up a portfolio over the last four-five years. If you combine these two portfolios, it gives us a nice dominant position in the diamond business. Very profitable business, very well run, as you would know. ABN AMRO has excelled in running these businesses with very low delinquencies, so we are happy that this transaction has happened.
IndusInd Bank stock price
On April 10, 2015, at 11:10 hrs IndusInd Bank was quoting at Rs 947.55, up Rs 4.55, or 0.48 percent. The 52-week high of the share was Rs 959.00 and the 52-week low was Rs 472.00.
The company's trailing 12-month (TTM) EPS was at Rs 31.98 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 29.63. The latest book value of the company is Rs 170.55 per share. At current value, the price-to-book value of the company is 5.56.
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