Present global economic scenario offers an excellent opportunity for Indian banks to expand their overseas presence, said Thomas P. McGrath, managing partner, financial services, Ernst & Young -(Europe, Middle-East, India and Africa).
“Many banks in foreign countries are available at attractive valuations currently in Euro Zone or in North America. Since Indian banks are well capitalised and aspire to strengthen their brands globally, they should propel their overseas business operations through buy-outs too,” he said.
He said that the current global market conditions, however unpredictable, are presenting unprecedented growth opportunities for financial entities that are cash or capital rich to take market share in profitable segments away from weakened competitors.
McGrath said that one of the biggest lessons to emerge from the recent economic crisis is that foreign banks are by and large undercapitalised, and have not been setting aside the right amount of capital for the risks they are running. Finding the means to maintain sufficient regulatory capital is now one of the biggest issues with which these institutions are grappling. Financial institutions and banks are still finding access to capital a challenge.
Also, in a bid to elevate the efficiency levels of Indian banks, Ernst & Young is in the process of advising a few Indian banks on their business process improvement initiatives. “That would help Indian banks to compete with global players,” said Viren Mehta, director, Ernst & Young.