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Finance Global majors sense opportunities A growing number of international and financial services players are seeking to establish a presence in , or expand their existing operations. A report by R Nagesh.

24 NTERNATIONAL banks and financial at a brisk pace have drawn many leading services majors continue to seek a foreign banks and financial firms to India. presence in India, a market that is According to the Reserve of India increasingly being seen as robust, (RBI) – the country’s – there withI a huge potential for growth, but at the were 32 international banks with nearly same time well-regulated and monitored. 300 branches operating in the country The ability of the Indian banking and towards the end of June 2009. More than financial services sectors to withstand a 40 foreign banks also had representative series of crises of global dimensions in offices in the country in June 2009. recent years – including the Asian finan- With India being a member of the cial crisis of the 1990s and last year’s World Trade Organisation (WTO), it has international financial meltdown – has been meeting its obligations by allowing reinforced the belief that the country a minimum of a dozen new branches of is a safe place for international banking foreign banks (the minimum required majors to do business in. under the WTO obligations) to be opened In addition to this, factors such as every year. Almost 100 new branches stable banking and financial services have been opened by international banks policies and practices, a huge untapped over the last seven years. market for financial services, a rapidly The RBI has also been issuing new globalising domestic industry – with licences or granting in-principle approvals several multi-billion-dollar international to international banks seeking to set up a acquisitions signed in recent years – presence in the country. The central bank and the fact that India is one of the few issued licences to three new foreign banks major economies that continues to grow in 2009 to operate branches in India; they

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‘For financial services companies, India presents a huge opportunity to tap’ An interview with Neeraj Swaroop, regional ceo, India and South Asia, Bank:

Several international financial product targetting NRIs in key cities sector players including banks are across the world. We are expanding our eager to set up a base in India, or ATM network by 100 in just and expand their existing operations. alone. Our client base in the small What do you think are the reasons and medium enterprises (SME) business for the global interest in the Indian has grown five-fold in the last three years financial services sector? and has ambitious plans to expand. Very few global corporations today can In wholesale banking, we are afford not to have India as a top priority becoming a preferred bank in mergers market. The sheer size of the population, and acquisitions (M&A) advisory and debt favourable demographics compared to the capital markets – we have participated in West, rising domestic demand, bouncing landmark transactions and have a robust back of industrial growth, the continued pipeline of deals. We are continuing to momentum in the services sector, the grow the project finance business. huge investment in infrastructure required 2010 is a year when we will turn our – India is now truly transforming itself to focus to equity capital markets to help leverage the potential of its size. our clients with equity-linked products Clearly, our time is now. Compare like initial public offers (IPOs) and equity that with the slow growth, the impact placements. of the recent financial crisis and ageing We have also acquired the American population in the western economies – Express Bank business in India and UTI India is the market to be in. Capital Markets, now known as Standard For financial services companies, Neeraj Swaroop Chartered Capital Markets. We will India presents a huge opportunity to tap. business four-fold in the last four years. continue to look at inorganic opportunities If you were to look at the penetration of within the current regulatory framework. credit cards or mortgages or any other What are you expansion plans? We have infused US$ 1.3 billion of capital retail product and compare it with the Standard Chartered has been in India for into the Indian business in the last two West or some of the more advanced 152 years. India has always been a top years. In short, we will look at every Asian economies, India still looks under- priority market for us. We are one of the opportunity in India to grow. banked from a retail banking perspective. few full-service international banks in Again, the pace at which Indian India – that is, we offer every consumer Are you planning to increase your companies are expanding overseas – or wholesale banking product that we headcount in India? the Tatas acquiring Corus and Jaguar- offer our clients globally in India. In fact, We are one of the few banks which LandRover, and Bharti buying Zain – also because of our focus on this market, have continued to hire despite the global provides opportunities in the wholesale many of our products are actually piloted financial crisis. To support our growth in banking play. in India. India, we will hire around 2,500 more by International companies are now Our continued investment in people, end of 2010. In 2009, we recruited about waking up to this opportunity called India. products and capabilities has seen a 2,300. But for us, India has always been a top sharp growth over the last four years. priority market. We saw this opportunity We will continue with this investment in Do you see growing consolidation much ahead of the others. In 2000 the coming years. Private banking, which in the Indian banking sector? Is when other banks were exiting India, we we launched in 2007, has grown rapidly Standard Chartered on the look- bought Grindlays and became the largest and we continue to invest in relationship out for acquisitions in India? international bank in the country. Because managers and product capability. The way I see it, despite India having a of our focus we have grown our Indian We have launched our Global Indian large number of banks, the country is still

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heavily under-banked and the availability Standard Chartered will continue global powerhouse. of banking services must be enhanced to look for opportunities in India, but The reforms have been and evenly distributed with rural centres we are limited by regulation. We have complemented with moves to develop a also adequately covered. Moreover, only acquired Bank and sound institutional framework, which has a handful of the banks are internationally UTI Securities, and Grindlays earlier, helped the economy withstand shocks competitive and are capable of meeting and these have been very successful such as the Asian crisis of 1999, and the the full banking needs of India’s acquisitions. sub-prime crisis of 2007-2009. rapidly globalising corporate and retail International banks such as Standard customers. What further changes do you Chartered are constrained by their Consolidation will help by creating a foresee in the banking sector in footprint, but are leveraging their layer of large and sound banks that can India? strengths to support financial inclusion. compete on a global scale. Such banks India has adopted a gradual approach For instance, over the past year, Standard would be well placed to support India’s towards reforms marked by progressive Chartered leveraged its debt capital globalisation on the one hand, while as a de-regulation of industry and financial market capabilities to help several Indian larger player would enjoy the benefits of markets, and development of financial microfinance institutions raise about US$ a wider network by expanding globally. It architecture to support free enterprise. 45 million from the capital market. will provide Indian banks access to better This process has dramatically changed We believe that future reforms in the resources, stronger distribution strength, the business environment. financial sector will focus on consolidation well diversified and rounded product Greater foreign participation has to create globally competitive players that suite, and economies of scale. Larger, brought in international best practices. support the country’s globalisation; better stronger players would also be better Increased competition from global and reach of financial services to under-banked placed to address challenges such as private players has revitalised the public areas including development of products financial inclusion. sector.The use of technology has enhanced that meet the unique requirements of Of course the creation and managing efficiency and improved customer rural customers; and a larger role for of large organisations will have its service. While several gaps remain, such foreign banks, which despite a limited complexities, which must be managed as the development of a vibrant corporate footprint, have a significant presence in carefully to leverage the benefits of debt market, the benefits of reforms have the market and can play a more impactful consolidation. transformed the economy into a potential role in India.

include FirstRand Bank of South , Maharashtra and Cuddalore in Tamil Nadu Commonwealth Bank of Australia and – has seen its headcount in India grow by Malaysia’s CIMB Bank Berhad. With the rising seven times over the last five years to Earlier, in 2008, the RBI and the 400. Monetary Authority of Singapore (MAS) middle class and The RBI continues to issue licences/ signed agreements that enabled DBS in-principle approvals to other foreign Bank of Singapore to open eight additional with growing banks. Australia and New Zealand branches in India (taking the total to Banking Group (ANZ) and 10), and the United Overseas Bank Ltd, intra-Asia trade Group AG are the latest to have obtained Singapore, to launch its maiden branch in the RBI’s in-principle approval for starting Mumbai. flows, we are branches in the country. DBS has unveiled a new strategic excited about the “This is an important step for ANZ roadmap for India, with its focus on as part of a long-term commitment to corporate clients, high networth individ- opportunities. progressively rebuild our presence in uals (HNIs) and the emerging affluent India,” says Alex Thursby, ceo, Asia-Pa- segments. cific, Europe and America, ANZ. “There “We are at the beginning of what has Piyush Gupta, is a significant and growing economic been heralded as Asia’s decade,” says ceo, DBS relationship between Australia and Piyush Gupta, ceo, DBS. “With a growing India.” network in India, as well as other major According to Thursby, India has emerging markets in Asia, DBS is well- With the rising middle class and with become a global centre of excellence in positioned to ride the region’s growth. growing intra-Asia trade flows, we are technology and operations, and ANZ’s DBS is the first and largest Singapore excited about the opportunities ahead.” Bangalore campus, which was estab- bank in India, and has enjoyed tremen- The bank, which plans to open lished in 1989, now employs almost dous growth over the past five years. two more branches – in Kolhapur in 4,500 people supporting its business in

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Foreign banks in India Abu Dhabi Commercial Bank Ltd American Express Bank Ltd , NA Bank of Bahrain & Kuwait BSC Mashreq Bank PSC Bank of Nova Scotia Bank of Tokyo Mitsubishi UFJ Ltd N.A Hongkong & Banking Corporation Ltd Societe Generale Sonali Bank BNP Paribas Bank p.l.c DBS Bank Ltd Bank Internasional Indonesia Arab Bangladesh Bank Ltd Standard Chartered Bank State Bank of Mauritius Ltd Cho Hung Bank Chinatrust Commercial Bank Ltd Krung Thai Bank plc N.V J P Morgan Chase Bank Mizuho Corporate Bank Ltd Oman International Bank SAOG Calyon Bank CIMB Bank Berhad (Malaysia) Comonwealth Bank of Australia FirstRand Bank Ltd

Source: Reserve

Australia, New Zealand and Asia. over the next 12 months. The group its balance sheet to provide financing About 10 years ago, ANZ – which currently offers non-banking financial to clients, complementing the capabili- was then known as ANZ advisory services in India through ANZ ties of Credit Suisse’s non-bank financial – sold off its assets in India to Standard Capital Pvt Ltd. company in India. The license will also Chartered Bank. The group now wants Credit Suisse also has a similar permit the bank to deal in Indian Govern- to re-establish a presence in India, which background in India. The international ment securities, other domestic fixed has become a strategic priority for it, as finance major received in-principle income products and foreign exchange. part of its objective to become a super approval from the RBI in March 2010 “This is a key pillar of our Asia-Pa- regional bank focussed on Australia, New to establish a bank branch in Mumbai, cific strategy of developing our onshore Zealand and the Asia-Pacific region. enabling it to substantially expand the presence in major markets throughout The foreign bank licence will allow range of services it offers in the Indian the region,” notes Kai Nargolwala, ceo, ANZ to provide a wide range of retail and market. Credit Suisse Asia Pacific. “We believe wholesale banking services in India. It Once established, the Mumbai branch that having a local banking presence will aims to set up its first branch in Mumbai will be able to accept deposits and use enable us to build stronger relationships

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Deutsche Bank, Mumbai with our clients and meet more of their services to its businesses globally. It also needs. Credit Suisse views India as a has staff providing legal and compliance key strategic growth market for the bank tasks, risk management, investment globally.” India is a key analysis, data gathering and analytics According to Mihir Doshi, ceo, Credit pillar of our Asia- modelling to its global private banking, Suisse India, the bank will be able to investment banking and asset manage- provide a much broader range of solutions Pacific strategy of ment divisions. to its domestic and international clients, Credit Suisse acquired a non-banking facilitating the flow of capital and invest- developing our finance company (NBFC) in 2008 and ment into India. The bank is active in made a US$ 203 million capital infusion to wealth management, investment banking onshore presence it in January 2009, enabling it to support and asset management in India, serving key clients with its balance sheet in local high net worth, corporate and institu- in major markets currency. It has also been active in private tional clients. equity in India, investing around US$ 240 It is a leader in Indian equity brokerage throughout the million through different funds. and research through Credit Suisse region. Additionally it has won and executed Securities (India) Pvt Ltd, which has many significant equity capital market a broker dealer licence in the Bombay mandates in India in the last 18 months, Stock Exchange and National Stock Kai Nargolwala, including the US$ 750 million combined Exchange. Credit Suisse also holds a ceo, Credit Suisse Asia Pacific Global Depository Receipt (GDR) and merchant banking licence for investment Convertible Bonds issue by Tata Motors; banking activities and a portfolio manage- the bank has more than 40 employees in the US$ 108 million GDR issue by Suzlon ment licence for its wealth manage- wealth management and has been aggres- Energy; the US$ 575 million Qualified ment business from the Securities and sively hiring relationship managers. Institutional Placement (QIP) offering for Exchange Board of India (SEBI), the It also has two centres of excellence Unitech; and the US$ 150 million QIP for capital market regulator. in Pune and Mumbai employing almost Lanco Infratech. Credit Suisse’s investment banking 3,600 people, providing IT, operations, Another international financial major team has doubled in size since 2007; financial accounting and human resources that is keen to leverage its existing

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ICICI Bank, Mumbai strengths in India by opening a commer- in Ludhiana in Punjab and Moradabad in cial bank is Goldman Sachs. The US-based Uttar Pradesh in April 2010, taking its financial giant operates an investment network in India to 15. banking unit, has a licence for an asset We see the “Ludhiana is one the premier cities management business and is keen to commercial of Punjab and we are delighted to offer start a bank, says Brooks Entwistle, ceo our world class financial and advisory and managing director, Goldman Sachs banking space services in this vibrant market,” explains India. It has applied to the RBI, seeking a Gunit Chadha, managing director and commercial bank licence. as a tremendous ceo, Deutsche Bank, India. “We will offer Another US-based financial power- appropriate solutions to meet the increas- house, Citibank, also has ambitious opportunity for ingly sophisticated financial needs of the expansion plans for India. “We see the discerning corporate and individual clients commercial banking space as a tremen- Citi in Asia and in based in Ludhiana.” dous opportunity for Citi in Asia and in India. Relatively new entrants, including India and we are committed to growing Deutsche Bank and DBS Bank of Singa- our presence in this space where today, pore, are increasingly focussing on tier-2 we have over 200,000 clients across Asia Gaurang Hattangdi, and tier-3 cities in the country. Deutsche Pacific,” points out Gaurang Hattangdi, head, commercial banking, Bank, for instance, has branches in cities head, commercial banking, Asia-Pacific. Asia-Pacific,Citibank such as Aurangabad, Kolhapur, Pune, “The new integrated commercial bank Moradabad, Vellore, Salem, besides the provides us with a superior ability to metros (Mumbai, New Delhi, Bengaluru, serve customers ranging from small the business and professional, small and Chennai) and in the satellite and mid-sized companies, their owners and medium enterprises (SME) and cities of Gurgaon and Noida. and employees and the entire breadth mid-market enterprise (MME) segments, International players are sensing the of the firm’s market-leading corporate besides introducing several new tremendous opportunities that are avail- and wealth management products via a consumer products. able in India and are exploring smaller unified operating platform.” German banking major, Deutsche cities and towns where demand for finan- Citi India recently launched an Bank AG, is also expanding its presence in cial services products – ranging from plain integrated commercial bank to serve India. The bank launched retail operations vanilla to esoteric ones – is growing.

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