StanChart May End Indian Funds Sale to UBS -Paper

MUMBAI (Reuters) - Standard Chartered Bank (STAN.L) is expected to call off the sale of its Indian mutual fund business to UBS AG (UBSN.VX) because the central bank was unlikely to approve the deal on time, the Economic Times said on Monday, citing unnamed sources.

UBS said in January that, subject to regulatory approvals, it would buy the British bank's mutual funds business in India for about $118 million through the purchase of 100 percent of Standard Chartered Asset Management Co Pvt Ltd and Standard Chartered Trustee Pvt Ltd.

Earlier this month the Economic Times reported, citing unnamed sources, that the Reserve Bank of India had rejected the proposed takeover because it violated restrictions on transfer of shares in a non-banking finance company.

On Monday the paper said UBS had resubmitted an application but was unlikely to get approval in time to meet Standard Chartered's timetable.

A spokeswoman for RBI said they would not comment on individual applications.

A spokesman for UBS in Hong Kong said: "We consider our discussions with the regulator to be confidential."

The head of Standard Chartered Asset Management Co in India declined comment.

Standard Chartered would have the option of calling for fresh bids in a couple of weeks if UBS had not completed the deal by then, an industry source told Reuters.

"They have time till about Jan. 5, but it's very unlikely that they will get the RBI approval so soon," said the source, a mutual fund manager who may be a potential suitor if the business was put up for sale again and asked not to be named.

Standard Chartered was in "preliminary talks" with Credit Suisse (CSGN.VX), Morgan Stanley (MS.N), Goldman Sachs (GS.N), Temasek-controlled [TEM.UL] Lotus AMC and Aviva (AV.L), the Economic Times said on Monday, citing unnamed sources.

Standard Chartered MF has assets worth about 143 billion rupees ($3.6 billion), for nearly 3 percent of the market.

UBS is bulking up its asset management interests in Asia, and also formed a strategic alliance with Standard Chartered for fund distribution in India.

A deal would catapult any potential suitor into the top 10 mutual funds in India by assets, the source said.

India's 32-strong mutual fund sector is seeing increasing interest from global asset managers encouraged by a booming economy that is boosting incomes and investments.

Mutual funds accounted for 4.8 percent of the country's savings in 2006/07, up from just 0.4 percent two years earlier.

($1=39.5 rupees)

(Reporting by Rina Chandran and Nishant Kumar; Editing by John Mair)