The Royal Bank of Canada (RBC) opened its representative office in India on Friday. The largest bank of Canada will take a three pronged approach to provide capital markets products and services including global debt funding to Indian banks and corporations,to provide wealth management services for high net worth individuals and provide correspondent banking and trade finance services to Indian financial institutions. Gordon M. Nixon, RBC president and chief executive officer in a chat with Mint discusses why he thinks despite a late entry they are in a vantage position to serve Indian clients. Edited excerpts:
Don’t you think it is a tad bit late for you as a foreign bank to enter India?
I don’t think so. Surely, we are not as early as others but we certainly see the opportunity in the India continues to expand and grow and markets are opening up.
Did you open a representative office because it is tough for a foreign bank to get a license in India?
It was a conscious decision to enter with a representative office and not a full-fledged branch in India. We got a license for a representative office from the India regulator in a record time of four months, and if we do decide to go into a branch status at a later date, our past experience with the regulator gives us reason to believe that it will be well received. Also, from reciprocity perspective Canada is a very open market with respect to foreign banks. There are two Indian banks with operations in Canada and there are at least another two or three who are looking at operations there.
How are you planning the Indian market?
Initially we wanted to come to the Indian market and take advantage of some of our international capabilities, that we think we can market through a representative office, but later we have plans to get more involved in the Indian marketplace. To begin with we will have people in wealth management, which is primarily marketed in our offshore operations. On the capital market side we will look at marketing our international capital market capabilities such as equity derivatives, foreign exchange, structured products, fixed income, capital raising for those institutions who have or need access to overseas markets.
Are you going to be looking at retail banking operations in India ?
No. We we will not be looking retail banking space in India . India is a very well served market with numerous and strong domestic and international players. Besides, you need a critical mass, customer base and efficiencies and the only way to do that is through is through and acquisitions. That is not a part of our strategy.
All other international banks present in India are very strong in capital market activities. What is you unique selling proposition?
Our international capabilities are strong so we think we are in vantage position to serve clients with international operations. We have a very strong balance sheet and credit rating and execution capabilities. Also as offshore private banking markets liberalize, we see that as a very good opportunity for ourselves. We also specialize in supporting banks with a presence in Canada in as many ways possible. Indian banks such as ICICI Bank Ltd and State Bank are already in Canada, and two other banks are coming there. We can assist them in everything right from regulatory process to garnering deposits. Besides for banks in India we can assist raise capital internationally, increase operational efficiency and also raise profits through structured products.We already have relationships with 20 leading banks in various shapes and forms and we intend to increase that number.
Are you looking at any specific industries in India where you could support capital market activities as well?
We are definitely better positioned to service companies that have resource based activities or are on the energy side, as we have strong capabilities in these areas. There a a few corporations in India who are looking at presence in Canada, and to these corporation we are much well positioned to serve them than any of the other international banks.
Could you tell us a little more about your wealth management activities?
We currently service Indian families who have moved to Canada, United States and UK. We are very active in servicing very wealthy Indian clients, on structuring their business operations. We have over the years acquired the business of Ernst and Young and Pricewaterhouse Coopers which has given us access to the a whole gamut of international clients. We service 33,000 wealthy families around the world, and many of them are Indian families based in east Africa, middle east apart from Canada. An office here will help us to round up the connections. We know we need to be closer to these families, but how it will manifest itself, we are yet to discover.