The Hindu Business Line : SCB to offer equity-linked notes to cos

SCB has so far not ventured into the equity side and only recently obtained regulatory approval to foray into convertibles. The bank had entirely functioned as a debt house. A convertible security is one that can be converted into another security, like a bond being converted into equity under certain conditions.

With Indian companies expected to spend about $150-200 billion over the next three years in capital expenditure, infrastructure and mergers and acquisition, SCB sees a lot of scope for products such as equity-linked notes (ELN) in the country. SCB could help these companies raise funds (including foreign currency) through such products.

An ELN provides investors fixed income together with equity market upside exposure. Fixed income investors who desire equity exposure with controlled risk could opt for ELNs.

Meanwhile, SCB hopes to clock revenues of $325 million in its wholesale banking business in the country in calendar year 2006. This would represent a 35 per cent increase over the revenues of about $240 million recorded in 2005.

"We are expecting a compounded annual growth of 25-30 per cent in wholesale banking in next 3-5 years. Our aim is to achieve annual revenues of $1 billion in wholesale banking by 2010-2011," Mr Bala Swaminathan, Managing Director and Regional Head-Client Relationships, India and South Asia, SCB, told reporters here on Tuesday..

Asset management

The bank maintained that it was still evaluating various "strategic options" for on its asset management business in the country and that no decision had has been taken to exit the business.

"This (asset management) is a business that we bought from Grindlays five years ago. It was a very small business. We have done an outstanding job to build a competitive position. We are thinking about the strategic options to make the business a market leader. There are no conclusions. We are still thinking it through," Mr Michael G. Rees, CEO, Wholesale Bank & Director of the bank said.

Asked what the strategic options could be, he said that it could be joint ventures, accelerated organic growth or even an exit. "Whatever it is, it has to turn the business into a market leading position," Mr Rees said.

SCB also wants to emerge as the second largest player in the country's wholesale banking arena by 2008. Currently, State Bank of India is the largest player in wholesale banking, followed by ICICI Bank and Standard Chartered Bank.

SCB's wholesale banking platform in India has about 400 employees and operates out of 41 locations.

More Stories on : Foreign Banks | Financial Services

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page