Mumbai: Shailendra Bhandari, who joined ING Vysya Bank Ltd two months ago as managing director and chief executive officer (CEO), has his work cut out as he tries to transform a medium-sized regional bank into a national one.
Over the next three years, he plans to boost ING Vysya’s market share by growing faster than the market.
Bhandari, who was earlier head of private equity at Tata Capital Ltd, is the first CEO of Indian origin to take charge of the Netherlands-based ING Groep NV’s Indian operations. He justified ING’s decision to have an expatriate as its CEO in India initially as it needed to integrate Vysya Bank with itself.
“Now they are looking at somebody who can understand the market and drive the bank,” he told Mint in his first interview to an Indian publication. He speaks about the way forward for ING Vysya Bank. Edited excerpts:
Why did you take this offer despite having left the banking industry?
After we completed the merger of Centurion Bank of Punjab Ltd with HDFC Bank Ltd, my personal inclination was not to do banking. I was very happy when Tata group asked me to set up the private equity business for them. It is a realization which happens over time; you get so used to the pleasure and pain of running a huge organization.
India focus: ING Vysya CEO and MD Shailendra Bhandari says in the western and northern parts of the country, the bank realized what appealed more to aspirational customers was the ING brand. Hemant Mishra / Mint
Banking is an everyday business—there is immediate reward and immediate pain. You get addicted to it. I realized it only after I was away from it for two years. When I was approached by ING, I thought it would be a great opportunity as I was aware of the potential of the franchise.
There is a perception that ING has not been able to use Vysya Bank’s strengths on account of a lack of focus.
I think you’re right. Given that ING came in 2002, it has been seven years (and) in hindsight we could have done better. I won’t say it’s a lack of focus. It took a lot of time for ING to understand what was the old Vysya Bank franchise, and to get it up to ING’s vision. (The) reality of ING Vysya Bank is that we have almost 480 branches and we are a national bank but we have some unique flavours.
We are one of the largest private sector banks in the south. In two states—Andhra Pradesh and Karnataka—we are the largest private sector bank. In Andhra Pradesh, we have 25-30% market share in terms of branches within the private sector.
Initially, there was not enough focus on how do you take what is primarily a south-based bank to a national bank.
There were also a lot of logistical issues like implementing core banking platform, getting the senior management team in place. Also, the branding proposition had to be right. In the south, we are very close to the Vysya community and we are very proud of our traditions and customers. But in the west and the north, we realized that what appealed more to aspirational customers was the ING brand. They wanted to be a part of a foreign bank.
It has been about two months that you’ve been in the job. What do you plan to do now?
I have a reasonable understanding of the franchise now. All the minuses in the last seven years have now been rectified.
We have built up our fee income engine. Fee income to total income is about 45% (and) here we have an opportunity. We have 480 branches and 60 branch licences in hand, our network gives us the opportunity to double our deposits base without making fresh investment other than to widen our footprint and invest in operations and technology teams.
We opened 48 branches last year, most of which were outside of the south. (Of) the 60-odd branches we will set up now, 50 will be in the west and north.
In terms of assets, we have the wholesale and retail business. We will look at leveraging the ING brand to cater to the larger Indian companies. We are serving medium-sized emerging companies like our peers, but you have to be very careful because when the cycle turns they are the first to be affected.
We have an advantage on account of the regional dominance and unlike other banks, ING Vysya Bank, on account of our traditional understanding of the Vysya community, we are very comfortable dealing with the self-employed.
Emerging corporates business, which we call business banking, where we work with companies with a turnover of below Rs150 crore is also an attractive proposition if done right. We have to look at this business as a portfolio and ensure granularity.
We do give commercial loans and car loans, (and) we are debating if we should increase our presence. We stopped two wheelers loans and personal loans. We have to complete our offering on the wealth management side and are exploring the possibility of launching some form of electronic seamless trading platform.
Are you a private Indian bank or a foreign bank?
We are a private sector bank. We are an Indian bank. We have total foreign ownership like most of the other large private sector bank(s) in the country.
The only difference is that in our case we have one single shareholder that holds a huge chunk. In terms of us being Indian, we are no different from other large private sector banks.
There is (a) debate on the possible impact of private banks with substantial foreign holding on change of FDI (foreign direct investment) norms…I have discussed this with fairly senior people in the Reserve Bank of India (RBI) and the sense that I get is that banks like ours should not be affected.
We are no unique case as the total foreign FDI and FII holding is around 67% and there are other private players with more than this. My sense from RBI is that it should not affect all of us.
How committed is ING to its investment in India?
There is enough proof that they are committed to investment in the bank. They have in the past seven to eight months supported the bank’s capital raising plans.
ING has participated in the qualified institutional placement and taken the maximum share that they were permitted to take by the Reserve Bank of India to maintain its holding at about 44%. Prior, to this they also participated in the tier II perpetual bonds.
Last month, the new chairman of ING, Jan Hommen, who took charge on 27 April, 2009, in one of his first trips outside Europe and the United States came to India. He reaffirmed that the first step is to put the house in order. He also said that for ING the growth markets will have to be Asia and the three in Asia would be China, Thailand and India.
The world is volatile and things can change but to the best of my knowledge ING is both committed and excited about India.
They have also for the first time appointed an Indian origin CEO.
Initially, having an expat made sense as integration into ING when it comes to systems and other best practices had to be put in place. Now they are looking at somebody who can understand the market and drive the bank.