* Sanctum Wealth set up RBS India private banking head ShivGupta
* Sanctum could rope in private investors after the deal -source (Adds details, context on India private banking business)
By Sumeet Chatterjee
MUMBAI, July 27 (Reuters) - Royal Bank of Scotland Group Plc is in talks to sell its Indian private banking businessto Sanctum Wealth Management, a firm set up by its local privatebanking business head Shiv Gupta, a spokeswoman for the banksaid on Monday.
Switzerland's Union Bancaire Privee said in March it wasbuying the overseas business of British wealth manager Couttsfrom RBS, as part of the bank's drive to pull back from foreignmarkets and focus on UK retail and commercial banking.
RBS' India private banking business was not part of thatdeal.
RBS has signed a non-binding framework agreement and is nowin discussions to sell the Indian private banking unit toSanctum Wealth, the spokeswoman said in an e-mailed statement,without giving details.
"This marks another step towards delivering the strategy tomake RBS a stronger, simpler, more sustainable business, morealigned with the needs of our customers in the U.K. and WesternEurope," the statement said.
A source with knowledge of the transaction with Sanctum saidRBS India private banking managing director Gupta could rope insome private investors in Sanctum Wealth after the transactionwas completed.
In India, RBS competes with global banks including BarclaysPlc, Citigroup Inc, Standard Chartered Plc as well as a host of domestic financial firms in thewealth management business.
Many foreign wealth managers had scrambled to open up shopin India a few years back and aggressively ramped up operationsto take advantage of robust economic growth, only to findthemselves struggling.
Although Asia's third-largest economy has been mintingmillionaires at a strong pace, it has failed to translate intoprofits for the banks that have set up teams of well-paidbankers to help manage those riches.
Cut-throat competition, high staff costs and weak marketsare squeezing revenue of the top private banks, while growthopportunities are limited by regulations that restrict productofferings.
Faced with these challenges, Morgan Stanley in 2013decided to sell its India wealth management unit to StandardChartered, after entering the fiercely competitive market aboutfour years ago.
Some industry executives, however, say that the long-termprospects of the private banking business in India remainsattractive, as a pickup in the country's economic growth isexpected to boost the number of high net worth individuals. (Reporting by Sumeet Chatterjee, editing by Louise Heavens andSusan Thomas)
Barclays (BARC)
