Infosys falls 2% as RBS deal cancellation weighs heavy

Shares of Vishal Sikka-led Infosys Ltd fell nearly 3% on Monday in the early trading session as the company over the weekend informed its investors of a key account falling through that may lead to a 'ramp down' of 3000 employees in India. 

Presently, the share price was trading at Rs 1044.90 down by Rs 18.40 or 1.73% on the BSE exchange. 

On Saturday, Infosys said that Royal Bank of Scotland (RBS)  has decided to not go ahead with the plans of setting up a new independent bank Williams % Glyn (W&G). 

In a quick note on the development, research firm Motilal Oswal (MOSL) said that the news is going to have an impact. 

RBS, in 2013, had awarded the deal to Infosys and IBM for 300 million euros. 

The Telegraph quoted RBS CEO Ross McEwan as saying, “Given lower interest rate environment, it is clear that W&G would be unlikely to grow its balance sheet to the extent necessary to deliver returns above the cost of capital within the next five years”

Motilal Oswal said, "As a result, we have cut our FY17E/18E USD revenue by 0.7% / 1% and earnings by 0.8% / 1%, as the ramp-down is expected to be gradual and not steep.