After Ratan Tata and Vijay Mallya, it is now time for the fast growing Indian banking and insurance industry to target takeovers in UK financial markets?that, too, by invitation!
?The UK has always welcomed Indian banks and insurance companies here. London, as the number one international financial centre, provides unlimited opportunities for these entities to grow their businesses. It is time that, like their manufacturing counterparts, Indian financial companies plan takeovers here,? David Brewer, former Lord Mayor of London, told FE.
Such is the pace of M&As in the British banking industry, the number of UK-incorporated banks declined between 1995 and 2005 from 224 to 164. ?We don?t care for ownership of the financial institutions as long as they do their job professionally under the guiding regulations,? said a spokesperson of the City of London, the organisation that promotes London as an international financial centre.
The UK banking sector is the third largest in the world after the US and Japan. In addition to having one of the largest commercial banking industries, the UK is also a major centre for investment and private banking.
Of the 347 banks authorised to conduct business in the UK, 264 foreign banks were physically located in the UK, with a majority of these located in central London. The fall in the total number of UK-incorporated banks was primarily a result of mergers and closures of some small institutions in response to changing market conditions.
?We will be happy to see Indian insurance firms take over local insurers, currently numbering around 700,? said Hugh Savill, director of public affairs at the Association of British Insurers.
During this period, there was a significant increase in the average size and financial strength of banks in the UK.
Almost all major Indian banks, including State Bank of India, ICICI Bank, Bank of Baroda and Punjab National Bank have a presence in London. Of late, ICICI Bank has grown its UK business rapidly. Among Indian insurance companies, New India Assurance and the country?s official reinsurer, GIC Re, are present in the UK.
Sources, however, point out that it would be some time before Indian banks and insurance companies venture into the M&A space in the UK. The banking market in Europe is more fragmented than in the UK. A study by AT Kearney predicts that the number of banks in Europe will decline by more than two-thirds over the next decade.
Travel for the story was sponsored by the City of London & UK Trade & Investment