Hidden treasure
Foreign banks have a substantial part of their operations locked in their non-banking arms.
Print Edition: Dec 26, 2010
At the headquarters of HSBC India in Mumbai's Fort area, Country Head Naina Lal Kidwai, 53, is chatting animatedly with this writer about a two-and-a-halfyear-old venture in life insurance. HSBC is the only large foreign bank that has taken a bet in this capital-intensive business with a 26 per cent share in a joint venture with two state-owned banks, Canara Bank and Oriental Bank of Commerce. "We are already amongst the top 10 players," says a beaming Kidwai.
The HSBC Group also has a presence in investment banking, stock broking, mutual funds and outsourcing. And it is not the only foreign bank that has its hands full with non-banking activities. At the extreme end of the same lane in Fort area, Neeraj Swaroop, Country Head of Standard Chartered Bank, is taking stock of a capital markets firm that was acquired some three years ago. Last month, StanChart had quietly ramped up its stake in Standard Chartered-STCI Capital Markets. The subsidiary was UTI Securities earlier before StanChart picked up a 49 per cent stake. "Equity was the only missing link in the group's global product basket," says Swaroop.
The Reserve Bank of India is expected to release guidelines for foreign banks to allow them more freedom in branch expansions and, perhaps, even in acquisitions. But foreign banks, in the meanwhile, have found a good avenue to tap opportunities in financial services - via their non-banking finance companies or NBFCs.
Mention NBFCs and, perhaps, the first one that comes to mind is Citifinancial, the retail lending business which global CEO Vikram Pandit has put on the block across the bank's global operations. But if you thought Citifinancial was the Indian operation's largest NBFC, Country Head Pramit Jhaveri will remind you about another one that is bigger - Citicorp Finance (India), a diversified financial services entity with operations from automobile financing to investment and research analytics services. "Citicorp Finance is our main NBFC in India and core to our operations," says Jhaveri.
Another NBFC that is significant for Citi in India is Citicorp Capital Markets, which has been at the forefront of a number of big-ticket deals. In 2010, it was advisor to Japanese steelmaker JFE Holdings' acquisition of 14.9 per cent in Sajjan Jindal's JSW Steel and GTL Infra's buyout of Aircel's tower business.
In terms of a pure banking play, Citi, HSBC and StanChart are running virtually neck and neck in India with balance sheets worth Rs 95,488 crore, Rs 90,425 crore and Rs 89,544 crore, respectively, for the year ended March 2010. But there is much more. "We operate in all segments of financial services," says Kidwai. And as Jhaveri adds: "You have to look at Citi as a conglomerate and not just at the banking operations alone (to determine our size)."
The HSBC Group also has a presence in investment banking, stock broking, mutual funds and outsourcing. And it is not the only foreign bank that has its hands full with non-banking activities. At the extreme end of the same lane in Fort area, Neeraj Swaroop, Country Head of Standard Chartered Bank, is taking stock of a capital markets firm that was acquired some three years ago. Last month, StanChart had quietly ramped up its stake in Standard Chartered-STCI Capital Markets. The subsidiary was UTI Securities earlier before StanChart picked up a 49 per cent stake. "Equity was the only missing link in the group's global product basket," says Swaroop.
The Reserve Bank of India is expected to release guidelines for foreign banks to allow them more freedom in branch expansions and, perhaps, even in acquisitions. But foreign banks, in the meanwhile, have found a good avenue to tap opportunities in financial services - via their non-banking finance companies or NBFCs.
Mention NBFCs and, perhaps, the first one that comes to mind is Citifinancial, the retail lending business which global CEO Vikram Pandit has put on the block across the bank's global operations. But if you thought Citifinancial was the Indian operation's largest NBFC, Country Head Pramit Jhaveri will remind you about another one that is bigger - Citicorp Finance (India), a diversified financial services entity with operations from automobile financing to investment and research analytics services. "Citicorp Finance is our main NBFC in India and core to our operations," says Jhaveri.
Another NBFC that is significant for Citi in India is Citicorp Capital Markets, which has been at the forefront of a number of big-ticket deals. In 2010, it was advisor to Japanese steelmaker JFE Holdings' acquisition of 14.9 per cent in Sajjan Jindal's JSW Steel and GTL Infra's buyout of Aircel's tower business.
In terms of a pure banking play, Citi, HSBC and StanChart are running virtually neck and neck in India with balance sheets worth Rs 95,488 crore, Rs 90,425 crore and Rs 89,544 crore, respectively, for the year ended March 2010. But there is much more. "We operate in all segments of financial services," says Kidwai. And as Jhaveri adds: "You have to look at Citi as a conglomerate and not just at the banking operations alone (to determine our size)."
