Rana Talwar won’t set a time horizon to it, but he wants the Centurion Bank of Punjab (CBoP), of which he is the chairman, to become one of the “top five banks in the country by offering a full range of services to our customers”. Only, the former CEO of Standard Chartered Bank’s worldwide operations is no longer counting on just acquisitions, which have taken CBoP’s assets to Rs15,031 crore, to achieve this.
Talwar, under whose leadership Standard Chartered acquired ANZ Grindlays Bank’s operations in certain parts of the world, including India, is still keen on acquisitions, but he is counting on alliances to help broaden the bank’s portfolio of services.
“The strategy is to select partners with special skills and make third-party services work for the bank,” said Talwar. “By offering third-party services in growth areas such as e-broking and asset reconstruction through our bank, we will create value for our shareholders and customers.”
CBoP’s strategy is evident in the holdings it has built in various companies in recent months: It has a 30% stake in the International Asset Reconstruction Co. that has acquired a licence from the central bank to buy bad loans from banks; it has a 20% stake in brokerage Ambit Capital Pvt. Ltd; it has a partnership with Television Eighteen India Ltd, which runs business channel CNBC, to offer e-broking services through the company’s finance portal moneycontrol.com; and the bank’s promoter Sabre Capital Corp. has a 32% stake in Lotus Asset Management Company Pvt. Ltd, a mutual fund firm.
The bank has also acquired a 20% stake in Centillion, a Bangalore-based business process outsourcing firm, and a 29% stake in Kairoleaf Services and Solutions Pvt. Ltd, a Mumbai-based firm that builds software models that can increase the efficiency of a bank’s functions in areas such as customer acquisition, account management and collection management.
CBoP’s entire back-office operations, previously managed out of centres in Mumbai and Gurgaon, have now been moved to Centillion. “The idea was to turn our costs into revenues and improve operations within the bank,” said Amit Khanna, manager (strategic planning and initiatives) CBoP.
Sabre Capital entered the Indian banking sector in 2003 by acquiring Centurion Bank. Since then, Centurion Bank has acquired Bank of Punjab, Lord Krishna Bank, and the Indian operations of Bank Muscat International S.A.O.G.
“We have come a long way from shaky times in 2004, where people had even anticipated that we would be put under a moratorium (a freeze on operations, which the central bank imposes on troubled banks). Today, we are confident that we will be able to offer a full range of services to our customers and create enough value for our shareholders,” said Anil Jaggia, chief operating officer, CBoP.
On 7 April, CBoP launched Centurion Elite, a priority banking service for individuals with a net worth in excess of Rs10 lakh.
For the nine months ended 31 December 2006, CBoP’s total income was Rs1,157.67 crore compared with Rs736.23 crore for the corresponding period last year. The net profit was Rs93.37 crore compared with Rs61.7 crore a year ago. The capital adequacy of the bank on 31 December was 10.53%. (Indian laws stipulate a minimum capital adequacy of 9% for banks; this means that for every Rs100 they lend out, they need to have Rs9 in capital.) And on the same date, CBoP’s non-performing assets (or bad loans) were 1.2% of net advances compared with 2.6% a year ago.
On 5 April, CBoP’s stock ended at Rs36.50, giving the bank a market capitalization of Rs5,718.82 crore as opposed to Federal Bank Ltd’s Rs1,865.32 crore and Yes Bank’s Rs3,973.2 crore.