Mumbai: At least two foreign lenders, Hong Kong and Shanghai Banking Corp. (HSBC) and Barclays Bank Plc., are likely to take the inorganic route to expand their Indian footprint either through acquisition of mid-sized banks or strategic tie-ups.
Top officials of the two banks hinted at the possibility of acquisitions here, which would enable them to rapidly ramp up their presence in the country.
Retail push: HSBC India country head Naina Lal Kidwai.
While HSBC’s India country head Naina Lal Kidwai said the bank plans to explore the inorganic route to expand its presence in the country once it gets permission from the regulatory bodies, Barclays Bank’s managing director (India and Indian Ocean) Samir Bhatia said the bank may consider partnering with a local lender.
“We will be looking at the inorganic option to grow in India as and when the regulator permits it,” HSBC’s Kidwai said.
HSBC, with its 47 branches in India, has a significant presence in the consumer finance segment. It is also rapidly scaling up its businesses in segments such as SME (small and medium enterprises) financing, trade finance and foreign institutional investment (FII) custody business.
The bank, which has a 40% market share in the custody business, had a credit card customer base of 2.7 million as at end of December 2007.
It will be implementing an aggressive expansion in retail as well, Kidwai said.
“We have a retail customer base of 2.4 million. We plan to enhance our focus on this segment in the coming years. We expect more business inflow, especially from the semi-urban centres,” she added.
HSBC’s corporate banking business expanded 60% to $517 million (Rs2,093 crore), while its total India revenue stood at $529 million, an increase of nearly 35%.
As per current regulations, foreign banks cannot hold more than 5% in domestic banks, but with the industry expected to be opened up to foreign players next year, overseas lenders are expected to pursue stake acquisitions aggressively.
Barclays Bank, a late entrant in India’s retail banking space, is also preparing to widen its presence in the country.
It may consider partnering with a local bank to propel its customer-acquisition activities, said Barclays Bank’s Samir Bhatia.
“We are talking to some of them (local banks) and may ally with the local banks for tie-ups in the area of products distribution,” Bhatia said.
But he did not divulge details.
With a view to promoting foreign participation in the country’s banking system, the Reserve Bank of India has allowed up to 20% shareholding for FIIs and non-resident investors in listed, state-owned banks.