Fish stated that the move was warranted by the fact that returns by way of a presence in the three cities were not commensurate with the investments made, and categorically added "that the bank will continue to periodically review its branch operations in other cities like in Calcutta where it has six branches".

The decision to close down the three branches was taken after unsuccessful attempts to sell them to Indian private sector banks and the success of the latest round of the voluntary retirement scheme (VRS). Most of the employees of the three branches have opted for the VRS, StanChart sources said.

With the closure of three of its long standing branches--Amritsar (89 years), Goa (36 years) andCalicut (71 years)--StanChart's network is now down to 20 branches.

"The closure comes after an intense review by the bank of its future business prospects in these cities. The branches have not been economically viable, and taking all costs into account, for considerable time", Fish said.

Existing StanChart customers at these branches will be able to transact their accounts up to end-April '99, and arrangements have been made for continuation of term deposits through the Chennai branch. The last date for accepting cheques for collection will, however, be the 15th of this month.

The three StanChart branches scheduled for closure collectively account for three to four per cent of the bank's liabilities with very little in terms of advances. "The bank is fairly liquid and a reduction in liabilities is not going to affect us in a big way. As for advances, they are no big relationships out of these branches, and in any case we will make alternative arrangements for servicing long standing corporaterelationships," Fish said.

The StanChart chief executive also made it clear that given the tough competition in the banking sector, it is but inevitable that businesses will increasingly be watched from the point of returns".

StanChart has made over Rs 500 crore by way of investments to upgrade its branches, product range and information technology. Said Fish while commenting on the bank closure: "Such investments in these three branches would not be economic given the bank's assessment of the business potential of these centres".

With its 20 branches now, StanChart is one of the oldest foreign banks having started operations in 1858. It has some 2,700 employees, and like most older foreign banks, had been offering a voluntary retirement scheme over the last four years. The closing down of three branches will reduce the workforce by 82, and Fish said that employees are being persuaded to accept the attractive severance package.