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Ms Karen Fawcett, Senior MD StanChart

Radhika Menon

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Mumbai, June 15 Even as financial institutions grapple with the global credit crunch post the sub-prime crisis, Standard Chartered Bank finds itself well positioned to support the growth of companies in Asia, West Asia and Africa.

The squeeze in credit has made effective liquidity management critical for companies, and this presents an opportunity for banks such as Standard Chartered.

For Standard Chartered Bank, transaction banking contributes around 50 per cent of its global revenues. Under transaction banking, it offers cash management, trade services, securities services and electronic channels among other services.

Ms Karen Fawcett, Senior Managing Director and Group Head of Transaction Banking, Standard Chartered Bank, spoke to Business Line on the global credit scenario and the challenges in the transaction banking space.

How is Standard Chartered positioned in the transaction banking space globally?

Globally we are the third-largest trade bank. We are in the top three or four for cash management as well as in the securities space.

The emerging countries contribute almost 100 per cent of the transaction banking business. For us, what is important is where the business has been booked and where it has originated from.

Although we have branches in London and New York, most of our business comes from Asia, Africa and West Asia. Asia in fact contributes 60-70 per cent of the transaction banking business. India contributes a substantial amount of this business.

What is your assessment of how the global credit scenario has affected banks?

We are in a strong position largely because of the policies we have followed historically and because of our position geographically. The sub-prime has not affected us directly because we have not invested in such papers. We have been expanding all our business lines.

We are, however, waiting and watching to see when the impact of the slowdown in the US economy will hit.

How much pressure do you see on global liquidity? How will it affect emerging economies like India?

Liquidity lines continue to be under pressure. In August and September last year, there were days when the computer screens showing inter-bank rates were blank.

Globally, clients are, however, showing the willingness to pay more for trade facilities.

Margins are, however, getting squeezed. And there is no immediate relief to this shortage. Rates will continue to rise and the situation with respect to liquidity may be seen for many months.

In India, the high domestic demand keeps it very insulated as opposed to other economies where there is a lot of import and export. Besides, there is a lot of rupee liquidity.

Which are the potential areas of expansion for Standard Chartered’s transaction banking business in India?

Transaction banking contributes 30 per cent of wholesale banking in India. The business is growing at 35-40 per cent. We have around 1,000 clients in the middle-market segment and 1,000 from local and global corporate space.

India is a fast-growing economy and small businesses are rapidly developing and becoming bigger businesses. We are gearing up our capabilities as we see tremendous growth in the middle-market segment. Our risk appetite for this segment has also increased.

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