DBS: According to newswires, DBS and IDFC bank are among the final bidders for RBS India assets. While no transaction details were announced, analysts had earlier estimated that a deal could fetch about $200m.
Based on RBS India's latest financial report, loans and assets were around $2.4b and $4b respectively, which formed just 0.8% and 0.9% of DBS’ loans and assets using 2014 figures. Therefore, any major impact if DBS is successful in this acquisition will be unlikely, and a potential acquisition will most likely be funded by internal sources.
A successful acquisition will however be a positive forward for DBS to expand its footprint in India, assuming no further asset quality risks. DBS aims to scale up its corporate banking business in India, particularly for the SMEs segment, with CEO Piyush Gupta guiding that the bank will need to expand its branches to up to 75 from 10 now to better cater to SMEs.
In the longer term, DBS plans to scale up its operations in India from being a large corporate bank to a universal banking model.
Maybank-KE currently has a Sell rating on DBS with TP of $16.05, based on 1.0x FY15 P/BV, close to 1SD below its mean since 2005.