The Deutsche Bank model does not revolve around storage of assets or loans. Indian clients still need money for growth and there is good opportunity to match clients’ needs by leveraging our global capital markets businesses to provide clients with senior debt, mezzanine debt or equity capital. Additionally, the bank’s custody and cash management business, distressed asset business, flow foreign exchange business, equity broking businesses are going strong. We are adding people at a time when banks are talking about slowdown. In 2008 itself the bank has added 300 people in India.
Meera H. Sanyal, executive vice- president and country executive, ABN Amro Bank India:
Within the retail business, we have always had a very strong focus on wealth. This strategy has served us well over a period of time as the equity market has done extremely well. Now, the equity market is going through a difficult time but the opportunity for wealth management has not diminished.
The feedback that I am getting from our front-end desk is that investment advisory has shifted from equity to debt-oriented products, capital-guaranteed structured products and gold traded funds.
In the private banking space, ABN Amro has always been the largest foreign bank and now with RBS Coutts we are going to take it to a different level. RBS Coutts is a very premium name in the private banking space, globally.
As we speak we are formulating the strategy. We are going to present RBS Coutts as a luxury product to our customers. The focus will be on the product range and distribution. We are analysing the emerging wealth centres in the country.
The credit cycle is definitely turning but we see our cards spend being robust and we will continue to grow our business. In these market conditions, we will work with our selected corporate clients. We are also focusing on growing current and saving accounts to bring down the cost of deposits.
How do you manage the credit quality?
Nayar: It’s not that all assets are performing badly. Only the unsecured assets have a problem and the delinquency rate in the unsecured book is higher. Delinquencies are also expected to edge up in the small and medium enterprises or SME portfolio because they are the ones who are hit first in a high interest rate and high inflation environment.
I haven’t seen any incremental increase on NPAs on that side. This is because a couple of years ago, we really began to tighten the origination methodology. We were the first to offer dedicated SME banking and over the years have witnessed and learnt from the ups and downs of the economic cycle and its impact on the sector. Accordingly, we are able to advise our clients and help them better manage the situation.
We have taken several corrective measures in the way we originate business volumes. We have reduced the use of direct sales agents and are maintaining a direct, sharp focus on originations. We have strengthened underwriting norms. There is significant emphasis on cross-sell of complementing products and services to our existing set of customers. We always advise our customers to spend within their means and to maintain a good track record in managing their credit.