Sanctum Wealth Management to Acquire Indian Private Banking Business of RBS
The chief of the Royal Bank of Scotland (RBS) Group’s wealth management business managing the Indian operation is acquiring the business and taking over the charge from the hands of the British Bank. The concerned deal is estimated to be around Rs 200 crore, scoring a unique management takeover in the corporate scenario of the country.
Sanctum Wealth, a company headed by Shiv Gupta and patronized by a cluster of venture capital investors, will acquire the wealth management business from RBS, after which they will be managing assets worth Rs 12,000 crore. The list of investors who are in support of Gupta is Jayesh Parekh of Jungle Ventures, Shagun Kapoor Gogia of Tuscon Ventures and Nitin Nath of Mount Nathan Advisors.
In a statement released on Thursday, the bank mentioned that it will hand over the charge of its private banking unit’s staff as well as onshore clients to Sanctum Wealth. Sanctum said that it is planning to continue all the branch networks currently managed by RBS private banking in the Indian Territory. Both the parties have refrained from divulging the financial details regarding the deal; however, the sources in the knowledge of the changeover are estimating it around Rs 200 crore.
In order to focus on UK’s retail and commercial banking activities, the bank had announced earlier in March the sale of its private banking and also wealth management business to Swiss-based company Union Bancaire Pirvee (UBP), as part of their planned pullout process. The list of countries in the sale of private wealth books included Switzerland, UAE, Qatar, Monaco, Hong Kong, and Singapore, but left out India since the Swiss Bank had no presence in the country.
Hence it gave Gupta an opportunity to propose for the India book, which administers the assets of over 100 top individuals having sky scraping net worth from the country. The business has a core team of 60 members and is expected to be retained by the acquiring company.
According to Gupta, who himself is an RBS old hand of 15 years, “There’s a lot of underlying value in the assets we hold. RBS has built a solid book since it took over from ABN Amro six years ago”. However, he refused to share details, specifically regarding his share in Sanctum. Gupta was one of the founding members of British bank’s wealth management unit Coutts International South Asian business and was posted in Singapore before switching to India in order to lead the private banking arm of RBS in the country.
Sanctum is hopeful to complete the deal by March 2016, by this time it hopes to acquire all the needed approvals from all key controllers and also the Competition Commission of India. It almost took three years to procure all the approvals by Julius Baer, a Swiss private bank, which has recently set foot in India by acquiring DSP Merrill Lynch’s wealth assets.
With the rise in the numbers of individuals of high net worth in India, the wealth management industry is becoming more and more popular.
As per the report of Capgemini and British bank’s wealth management the country has secured 11th rank among countries with most counts of millionaires.
The count of HNIs (High Net worth Individuals) has ascended from 1.56 lakh in 2013 to 1.9 lakh in 2014.
Quite a few foreign wealth manager players extended their services to the Indian subcontinent and aggressively accelerated the operations hypnotized by the charm of the country’s economic growth potential, but then they soon came under pressure. In spite of the rise in the counts of millionaires, many of the players in the wealth management business limped due to intensive competition accompanied by high staff cost and the restrictions to offer a complete package of financial products since most of them were barred by regulations.
Yet, the investors in Sanctum are confident and positive in seeing strong potential for their business. “I see a lot of wealth creation and accumulation happening in India”, said Parekh in his statement, chief of Jungle Ventures and one of the stakeholders in Sanctum.
