The Hindu Business Line : StanChart open to subsidiary route

Mr Bryan Sanderson, Chairman, Standard Chartered PLC (left) and Mr Chris Low, CEO, Standard Chartered Bank, India, at a press conference in Mumbai on Tuesday. — Paul Noronha

Mumbai , June 1

STANDARD Chartered Bank is looking for more operational flexibility in India and is toying with the idea of converting itself into a subsidiary.

The move comes amidst rising competition and its ambition to retain its position as the largest foreign bank in the country.

The earlier stated position of the bank had been that it would remain a branch and not convert into a subsidiary company incorporated in India. Currently, all the foreign banks in India operate through the branch model.

Said Mr Bryan K. Sanderson, Group Chairman, Standard Chartered PLC, London, who is in Mumbai for a short visit, "There is a strong competition in the Indian market on both the consumer banking and wholesale banking businesses and we are open to the subsidiary route. We are seeking more flexibility in our structure.''

A subsidiary of an international bank would have the advantage of greater ease in opening branches in India but the disadvantage of higher priority sector lending targets.

"We want to maintain the position of being the number one foreign bank in terms of profit. Currently, we are number one but we want to hold on to that position amidst competition. We believe in growing our top line along with our bottom line. We will initially look at the organic route and then also look at opportunity-driven inorganic options,'' he elaborated.

According to Mr Sanderson, the 10 per cent voting cap imposed on foreign banks on taking stake in a domestic private bank is not a deterrent although it is certainly a negative aspect.

Standard Chartered Bank's India operations posted a 12 per cent jump in profit before taxation for the year ended December 2003 at $186 million (Rs 837 crore) up from $166 million (Rs 747 crore) in the previous year. Total assets employed jumped over 18 per cent to $7,591 million or over Rs 34,000 crore ($6,411 million or Rs 28,849 crore).

In India, revenue has come from a mix of wholesale banking at $244 million and consumer banking at $224 million. Mortgage volumes and revenue doubled but there has been a significant decline in margins, said the bank's annual review 2003. Costs have increased by $15 million to $129 million as the distribution network was expanded.

Worldwide, India is the third largest market in terms of profit for the bank, which concentrates on emerging markets, right after Hong Kong and Singapore.

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StanChart open to subsidiary route