The Hindu Business Line : `We are open to acquiring a sizeable stake in a broking company'

Kolkata April 29 It is not often that one can catch a CEO of a foreign bank waxing eloquent about securities broking. Mr Neeraj Swaroop, CEO - India, Standard Chartered Bank, does just that and more, touching on a few other issues in the process in an exclusive interview to Business Line.

Excerpts.

Why do you wish to enter securities broking when this area is so very competitive?

We see securities broking as a good fit to our wealth management and private banking offerings. It will enable us to broaden our product suite.

We are looking at various options on how to go about the business, and are open to acquiring a sizeable stake in a broking company. The bank hopes to be in a position to announce some definite plans soon.

Incidentally, the new businesses we launched in the last 2-3 years - like corporate advisory, consumer finance, project finance, microfinance - are now gaining traction.

You will see us growing them more aggressively in the future. We will also launch private banking soon. This has great potential in India.

You seem to be keen on taking small stakes in other banks. What is the strategy here?

India is a top priority market for Standard Chartered. In fact, it is the third largest market and has increased its contribution to the bottom-line to 12.6 per cent from 8.8 per cent in the last year.

We aspire to be a fully embedded bank in this country, and will look at every opportunity to grow in this market.

The latest Credit Policy did little to change key rates. How do you think the situation will now play out?

The RBI Governor's policy statement gives greater clarity to his objective - supporting growth while controlling inflation. The decision to keep rates unchanged at this stage is probably because the previous hikes need more time to make their impact.

I will not be surprised if the Governor announces further monetary tightening measures, that is, if inflation is not reined in soon.

How will this influence Indian companies?

Keeping the rates intact bodes well for companies that are on a roll. Much of the commercial credit in recent quarters has been going into satiating investment demand. Balance sheets now are strong and under-leveraged and can absorb more debt. Any hike in the rates today would have hurt profitability and starved them of credit.

This augurs particularly well for the infrastructure sector, which requires big-ticket investments. Also, allowing companies to invest up to three times their net worth overseas and raising the overseas portfolio investment limit to 35 per cent are landmark decisions. These will encourage companies to expand abroad.

In the next couple of years, which aspect of your business is expected to grow significantly?

It is difficult to talk of just one area specifically because we expect all businesses in both the consumer bank and the wholesale bank to deliver strong performance in the coming years.

In wholesale banking we are putting greater focus on more sophisticated products like derivatives & options, M&A advisory, leveraged financing, etc.

In consumer banking, wealth management, unsecured loans and consumer finance businesses will be the better performers - largely a result of higher incomes and change in spending habits. Both SME and the middle markets will show exceptional growth - this is a key focus area for Standard Chartered.

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