The Hindu Business Line : ICICI Bank to expand presence in UK, Canada

It already has presence in the financial capitals of London and Toronto but is now planning to open branches in specific NRI pockets such as Mississauga and Southall.

The bank is luring depositors with higher interest rates made possible by its enormous cost saving by keeping most of its workforce in the country.

"We plan to increase our presence in Canada with an additional three branches and in the UK with two more branches. We will set up branches in NRI pockets and also establish net banking, phone banking and ATM channels in these markets," said Mr Bhargav Dasgupta, Senior General Manager, Head-International Banking Group, ICICI Bank.

"The cost advantage that we have is being passed on to the customer in the form of higher interest rates on deposit products. A 0.50-1.00 per cent premium over other banks' offerings helps us attract deposits," explained Mr Dasgupta.

In these markets where interest rates have hit rock bottom, the public welcome higher deposit rates.

The bank, which currently has presence in five foreign countries, believes it has tremendous cost advantages vis-à-vis international banks such as HSBC and Citibank. While international banks save about 30 per cent on costs by outsourcing low-end functions of data entry, call centre jobs and payment processing to India, ICICI Bank claims to save as much as 70 per cent with both low-end and high-end jobs such as product innovation and technology development based on Indian soil.

In Canada, ICICI Bank is considering setting up shop in the areas of Mississauga, a suburb of Toronto with a 3.6 per cent Punjabi and 1 per cent Urdu population, Scarborough and Unionville, all in neighbouring areas of Toronto. These towns are not commercial centres and therefore will not bring much corporate banking business but have a prominent South Asian community which the bank is targeting to offer consumer banking services.

In UK, Leicester with a 27 per cent Asian population and Southall with a 70 per cent Indian population are being considered for branch banking.

The bank has already garnered 15 per cent of the NRI fund remittances market, which has a total market size of $ 17 billion a year. The international operations broke even largely from fee income right in the first year of its roll out although a 3-4 year break-even period had earlier been envisaged.

A representative office in Bangladesh is in the pipeline with the bank's eyes set on the high margin, $ 2-3 billion annual trade flows between the India and Bangladesh. Incidentally, State Bank of India's Dhaka operations are said to be one of the most profitable among its overseas branches. Sri Lanka is also on the radar screen for ICICI Bank in order to capture the remittances flow from its non-resident population.