Jaspal Bindra: Return of the prodigal son
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On 15 January, at least 42,000 runners lined up at the starting point of the Standard Chartered Mumbai Marathon, the largest road-run event in Asia. Jaspal Bindra, who came up with the idea in 2004, was nowhere to be seen. In 2016 too, he was not around.
Bindra, the bank’s chief executive officer (CEO) for Asia and group executive director till early 2015, had not missed a single Mumbai Marathon till 2016. He had been living in Hong Kong from 2008 but would fly down for the event—always held on the third Sunday in January—and cheer the runners.
A few days ahead of the Mumbai Marathon, Bindra, 56, is a few minutes late for our luncheon meeting at the NRI (Not Really Indian) restaurant at the Bandra-Kurla Complex in Mumbai. To avoid the hassle of choosing individual dishes, we opt for Jugal Bandi, a meal for two, accompanied by a glass of Chandon Brut each. The starters are South African peri peri wings, BBQ prawns and a Burmese green tea salad; this year-old restaurant serves Indian-inflected cuisine from around the world.
As always, Bindra is dressed immaculately, in a white shirt and sky-blue turban. Some 15 years ago, over dinner at a different restaurant in south Mumbai—he was then regional general manager, India, and CEO of Standard Chartered Bank—Bindra, digging into his chicken satay and prawn tempura, had commented, “As long as I have an active sex life, I don’t need to play golf.” Those were not Twitter days, so it did not get wide publicity, but the banking community took note. He was perceived to be aggressive, someone who calls a spade a spade.
During his two-year tenure as head of corporate and institutional banking at StanChart (1998-2000) and later as the head of both StanChart and ANZ Grindlays (he oversaw the merger of the two), Bindra showed 3,200 employees the door—nearly 50% of the employee strength then.
By a twist of fate, he himself had to quit the bank where he was one of the top five executives. Did he feel insecure after the StanChart board, under pressure from shareholders, asked CEO Peter Sands to leave? Bindra’s answer is quite logical. He was one of the top four executives of the bank reporting to Sands. The others were Mike Rees (overseeing the wholesale and retail assets), Andy Halford (group chief financial officer) and V. Shankar (another banker of Indian origin, in charge of Europe, the Middle East, Africa and Americas). “Had the new CEO come from within the bank, I would have got a different responsibility. But since Sands’ successor came from outside, all four of us would have continued to do the same job. At mid-50s, I was looking for a different responsibility,” he says.
Was he eyeing the top job? “Well, maybe not at that point of time but yes, if I had stuck around, I would have liked the challenge,” Bindra says, nibbling on the spicy wings.
He was the first to leave after Sands. By end-February 2015, he had put in his papers. Shankar and Rees followed him. Did he get a ton of money as a severance package? The standard practice in the bank is one year’s remuneration when a board-level executive quits. And he was not allowed to take up any job in the financial sector for a year after resigning.
I cannot resist the temptation of asking how StanChart got into a situation in India where its bad assets ballooned and profits plunged. India, which accounts for anything from 15-20% of the bank’s global profits, and is probably the second-most important market along with Singapore, after Hong Kong, has gone through a real bad patch in the past few years. Was the local management (which was reporting to Bindra) reckless? Was it greed for balance-sheet growth that got the bank into trouble?
Bindra says the bank actually weathered the collapse of Lehman Brothers well and continued to show growth in profit until 2012. Thereafter, it suffered on account of a severe structural shrinkage in commodity prices. What he means is that the companies to which the bank had exposure were in the commodity space and once they suffered, their ability to service bank loans was dented.
Why did StanChart take such large exposures to so many companies in India which have in any case been over-leveraged, laden with loans they couldn’t repay? Bindra says this assumption is not entirely correct. “Our internal norms do not allow the bank to take more than 50% exposure in any loan. This means that even if it gives, say, a $1 billion loan to a particular company, it sells down 50-75% of it to other lenders within 90 days of disbursing the loan. So, we were as affected as others. It is not fair to say only StanChart accumulated bad assets.”
As the main course arrives—Sri Lankan Potli Murg and dal makhani with tandoori roti and rice—I decide to shift my focus to the present. Like quite a few other global Indian bankers, he is back in the country to do something on his own. Is it the proverbial return of the prodigal son? Also, what made him pick up a stake in Centrum Capital Ltd, a non-banking finance company (NBFC), and become an entrepreneur?
“I was 55 when I was leaving StanChart. I had three choices before me—I could have got a similar job overseas and probably run a smaller bank as CEO; partially retire and join a few boards of companies and offer advisory services; or become an entrepreneur. And if I were to be an entrepreneur, it had to be in India,” he says.
“Where else can you grow business in the banking and finance space? The public sector banks are losing their market share, foreign banks are shrinking business by design.... This is the best time to be in India. I could not afford to miss this window,” Bindra says.
Last April, he reportedly picked up close to a 20% stake in Centrum, started in 1995 by Bindra’s long-time friend Chandir Gidwani and Khushrooh Byramjee at the Bombay Mutual Building in Fort. It is a financial services firm with a presence in corporate finance, foreign exchange, wealth management, institutional broking and investment banking. It manages around Rs10,000- crore assets in its wealth management portfolio but does not have a balance sheet as such, for it does not give loans. Bindra is adding that piece to Centrum. He has started giving loans ranging from Rs5-20 crore to small and medium-size entrepreneurs. Not too many banks dabble in this segment where financing is based primarily on cash flows, not balance sheets.
He has already built a portfolio of Rs400 crore in this business. Another new business is small and affordable housing finance in the range of Rs10-25 lakh. Again, there is a huge opportunity with the government’s big push for affordable housing and drop in the cost of money. The third new fund-based business is private equity. “We need to compete with some of the private banks and a few other NBFCs, not the entire banking system,” Bindra says.
When he picked up the stake in Centrum, the market value of the NBFC was Rs450 crore. Now it has crossed Rs1,500 crore. I assume that at Rs450 crore market value, for a 20% stake, he would have put in Rs90 crore. But Bindra says that may not be the correct figure as he has picked up a stake in the holding company, not the listed entity. Now all three partners—Gidwani, Byramjee and Bindra—hold equal stakes of around 20% each in the listed entity.
After graduating from XLRI, a management school in Jamshedpur, Bindra joined Bank of America, where he spent 10 years. He spent another five at the Union Bank of Switzerland as head of business development in India before shifting to StanChart in August 1998, where he remained for 17 years.
Brought up in Kolkata and many district towns in West Bengal (his father was a police officer), Bindra’s Bengal connection is still alive. His wife is from Asansol, and he visits his in-laws often. He can speak fluent Bengali but has not developed a sweet tooth. So, while I choose butterscotch ice cream for dessert, he orders coffee.
The last round of conversation predictably revolves around demonetization. He joins the discussion a bit diplomatically. He agrees that digital banking in the unorganized sector is not easy but says that once we go cashless, the cost of operations will definitely come down and size will become less relevant for NBFCs. Currently, Centrum employs 2,000 people; for the foreign exchange business, its biggest earner, it has a presence at 19 airports and 100 outlets spread over 45 cities.
“Money is not a problem. There are plenty of funds available both as debt and equity. My challenge is to grow and build a solid track record and be in the reckoning to set up a bank. If available, we can buy a bank too,” he says. All these, if at all, will happen after 2020. Till then, he wants to build a solid NBFC which can compete with private banks effectively.
Like the Mumbai Marathon, StanChart’s Indian Depository Receipts, or IDR, was also Bindra’s baby. He agrees with me that it was a flop. “There have been issues such as tax and the class of investors who could buy IDRs. The insurance firms were never allowed to buy.... It was an experiment that failed,” he says. StanChart remains the first and only foreign company to launch an IDR.
But all that is behind him.
I remind him of his life-size bronze statue on the eighth floor of Standard Chartered Bank Plc’s old headquarters at London’s 1, Aldermanbury Square—a unique initiative of the bank to showcase the diversity of its employee base. In June 2013, the headquarters were shifted to 1, Basinghall Avenue in London. Does the new office still have his statue? He shrugs his shoulders. Bindra doesn’t really care much for such things now.
That day, the Centrum stock hit its lifetime high of Rs34.50. In 2016, when Bindra took over as the executive chairman and a promoter, it was trading at around Rs10.
His favourite memory: Carrying the Olympic-flame torch for the 2008 Beijing Olympics.
One assignment he loved: Global head of diversity and inclusion at StanChart, 2005-13.
His hobby: Watching films, travelling with his wife.
Favourite place on earth: Asansol, where his in-laws live (to keep his marriage alive!).
One thing he would like to forget: the StanChart IDR; it was ahead of its time.
One achievement he is proud of: the Mumbai Marathon.
One bit of media coverage that he cherishes: Being featured in ‘Time’ magazine in 2010.