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More gloom for RBS as King warning is followed by £190m failed sale

More gloom for RBS as King warning is followed by £190m failed sale

Royal Bank of Scotland's plans to sell down its non-core assets have hit a road block after  talks to offload its Indian retail and commercial banking operation lapsed.

RBS, which this morning was one of four lenders named in the Bank of England's Financial Stability Report as needing to up its capital reserves, told investors discussions to sell the £190 million Indian operation had ended and the 'sale will not be proceeding'.

Mervyn King, the Bank of England governor, said earlier that the UK's large banks would be working with the Financial Services Authority (FSA) to enure they could meet regulatory and compensation demands.  Where it is felt a lender cannot, King said 'non-core' assets could be sold.

As announced in July, RBS, which is headed up by Stephen Hester (pictured), had hoped to sell its Indian retail and commercial banking operation to the Hong Kong and Shanghai Banking Corporation.

The talks lapsed on 30 November, RBS said this morning, adding it will continue to wind down the business, which at the end of September had £190 million in assets and generated revenue of £42 million over nine months to the same date.

RBS said the business is 'profitable' and accounts for around 0.5% of the group's remaining non-core assets.

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