HSBC is 'hungry' to ramp up its presence in India

NEW DELHI: HSBC is ‘hungry’ to ramp up its presence in India and is prepared to do that by expanding its existing network or buying an existing bank if allowed, its chairman Douglas Flint told ET on Wednesday.

Flint, on his first visit to India since being appointed chairman last year, said HSBC’s Indian operations were the seventh biggest in its sprawling global empire and could easily move up to the top five if its ambitions were given free vent.

“If you said ‘choose one country in the world that you could expand into’, that would be India. (If you said) ‘you can have one pick and you can do whatever you like’, it would be India,” Flint, a former finance director of the bank, said in his first and only interview to an Indian newspaper.

Flint said HSBC had in the last 15 years made large investments in emerging markets such as Latin America and in China, but a larger presence in India continues to elude the world’s third most valuable and Europe’s biggest bank. “We have not had the opportunities to make major investments in India...We are hungry,” he said.

Foreign banks have operated in India for more than a century (HSBC has been operating since 1865), but their operations have been subjected to tight controls on how much and where they can expand. HSBC’s market value, at around $190 billion, is five times that of State Bank of India , but in India, the London-based bank is a minnow in terms of market share.

‘RBI Proposals Interesting’

With the Indian economy forecast to become one of the world’s top three economies after China and the US by 2050, HSBC and other overseas banks are keen to step up their Indian presence, hoping to leverage their global network to meet the funding needs of ambitious domestic companies .

The Reserve Bank of India (RBI) in January dangled the carrot of a near level-playing field to foreign banks provided they set up wholly-owned subsidiaries. Using this route, global banks such as HSBC, JPMorgan or Citi could set up branches at will in smaller cities and list their shares on Indian stock exchanges with at least 25% Indian holding, a discussion paper released by the central bank said.

About the RBI’s proposals, Flint said they were “very interesting”. “We need to understand the detail. But it looks good and we are certainly optimistic about the opportunity it gives us to build from where we are.” He said HSBC was game to both build and buy. “It will be terrific if we are able to open branches in key locations. And it would be good if we had the opportunity to acquire.”

Once one of India’s pre-eminent foreign banks alongside Citi, HSBC has lost ground in recent years to rivals such as Standard Chartered Bank, which has made strong inroads into India’s consumer and corporate banking markets. Its foray into unsecured consumer loans ended in disaster, saddling it with losses of more than $300 million in 2008 and 2009.

Flint, widely respected and consulted by regulators for his knowledge of arcane regulations, said the global banking sector was out of crisis phase, although several geopolitical and economic risks remained. “There are plenty of things out there to disturb what people had planned for the next few years. And obviously the financial system is always impacted by, and to some extent leveraged to, this kind of events because they can lead to spikes in pricing or significant moves in confidence,” he said.

Source: EconomicTimes