Branch expansion, back-office operations, software centre lined up

HSBC unveils big plans for India

Our Banking Bureau

Mumbai, Nov 27: It's not just Hong Kong and Shanghai for the Hongkong and Shanghai Banking Corporation (HSBC). One hundred and forty years after it set up shop in India as Mercantile Bank, and following a virgin-board meet in the country, HSBC made it amply clear that it loves India also enormously.

On Tuesday, HSBC’s chairman David Eldon JP underscored his statement that India is a key market by going public on the bank’s intent to increase its branch presence in country, perk up its back-office operations, set up a software development centre and an asset management company (AMC).

This is not all. HSBC will foray into insurance in a big way after “it understands the business better”; and it will also “take a look” at bankers who find themselves on job-street after WI Carr Securities and BNP Paribas bid adieu to niche-equity operations. In simple words: for HSBC, India is a growing market. And as Mr Eldon put it, HSBC wants to “grow in India, with India”.

Four new branch licences have been secured, which will increase its network to 33. These four new locations are Coimbatore, Noida, Ludhiana and Jaipur.

HSBC’s presence in the country now covers all business segments: retail, corporate and treasury. It also has a securities company which holds a primary dealership licence. “We intend to employ more in our back-office operations in India,” Mr Eldon said.

HSBC employs 1,100 staffers in its Hyderabad operations on this front, and the bank’s country-head (India), Zarir J Cama said that by next year, this will read 1,800.

A similar outfit is to be opened in Bangalore employing a fresh lot of 600. In Pune, HSBC will open a software development centre, wherein 300 staffers are to be employed.

Giving out numbers, Mr Cama said that the bank had invested nearly $15 million for its Hyderabad back-office operations. He said Bangalore may require similar amounts and Pune less than that, but did not reveal specifics.

As to what per cent of HSBC’s back-office work is done out of India, Mr Eldon struck a coy note: “Substantial”.

On the bank’s insurance foray, Mr Cama said that “it would prefer to understand the nature of this business”, while hinting that an an increase in the current foreign holding to 50 per cent thereabouts from 26 per cent as per the regulatory norm, may catalyse further interest.

HSBC has also got approval to set up an AMC and Mr Cama said that it will start operations by the second quarter of the coming year.

And the world economy? Said a rather “silent-in-the-media-briefing” HSBC Group Holdings Plc’s chairman, Sir John Bond: “The September 11 attacks in the US have worsened the economic situation. But as a bank, we are not over leveraged. Only 42 per cent of our assets are in loans. In a sluggish phase, deposits grow up, credit offtake dips and the biggest borrowers tend to be government. In such a phase, banks invest in government bonds”.

Today’s media briefing was preceded by a party on the Taj Hotel’s poolside on Monday night. Who all did the top brass meet? “Regulators and corporate clients. But I am not giving out any names. Let me say that we went to their offices and they came to ours!” HSBC will definitely enjoy the good offices of corporate-India. Mr Eldon made it clear: “We are not fair weather bankers”. Three cheers to that.