The Hindu Business Line : `In India, Barclays can piggyback on ABN Amro's retail franchise'

Chennai May 1 At $91 billion, the Barclays offer to ABN Amro, is being talked about as the biggest bank takeover bid thus far. The deal size is almost close to a tenth of India's GDP. "This is the age of banking mega mergers," says Mr Robin Roy, Associate Director, Financial Services, PricewaterhouseCoopers (P) Ltd, in an interaction with Business Line.

Here, he answers a few questions about the deal-in-the-works.

On the bias towards bigness in the banking industry.

Who says big is ugly? In the post Basel II era, in the renewed surge towards enhancing risk taking abilities, banking consolidation through mergers, acquisitions and strategic alliances will be seen more often. Financial product brands are not the order of the day but financial entity brands are still in the reckoning. In the global context, in recent times whether its Citi Traveller group, RBS Natwest or the latest one, Barclays ABN Amro, the age of the mega merger is rolling on.

On the synergies and what the deal can mean to India.

One may wonder what a Dutch financial giant could have in common with one of the largest UK `clearing' banks. Both the nations have been keen seafarers, ran colonies and trading stations across Asia and Africa and have been looking at newer geographic expansions for their diversifying banking businesses. In India, both Barclays and ABN Amro have been around for quite a while, with the latter having established a successful retail franchise too. In the last couple of months, the Barclay's blue eagle was visible at important points in the commercial capital of the country. Word has it, that they have gone in for aggressive hiring for their forthcoming retail-banking foray.

On the drivers for an acquisition of such epic proportions.

Well, complementarity of products and geographies, distinct customer segments and winning the `battle' in the EU, come to mind. In India, again, Barclays can perhaps ride piggyback, on the retail franchise of ABN Amro (Mortgages and Credit Cards) and leverage its own competencies in corporate and investment banking, and corporate and institutional banking. Some of the other drivers for change in banks in India impacting even the foreign banks would include: technology, globalisation, regulations, economies of scale, and M&As. Interestingly, a select survey conducted by PwC among foreign banks in India last year, brought out the following pressing issues for them: Improving revenue growth; operational risk management; product/revenue diversification; and increasing number of new regulations.

On the possible road ahead.

After the StandardChartered Grindlays merger, which created the largest `foreign bank' in India, we could see the emergence of yet another financial powerhouse, with an impressive global reach and impeccable credentials to address some of the issues noted above. Besides, Barclays would technically get a ready set of operating branches of ABN Amro to conduct business in India and plan to have a robust strategy in place, when the local regulators are expected to revisit the banking licence guidelines in 2009.

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