The country?s newest private sector bank, Yes Bank, which started operations in 2004 has become the fourth largest private sector bank with a balance sheet of R52,000 crore. Rana Kapoor, MD and CEO, is gearing up for a foreign listing together with an international launch. Kapoor tells Anita Bhoir, the bank wants to set offices in Singapore and Dubai next year.
You have launched a Version 2.0 growth plan?
In Version 2.0 we aim to become the ?Professionals Bank of India? and to grow the balance sheet to R1,50,000 crore with advances at Rone lakh crore and deposits of R1,25,000 crore by March 2015. Moreover, on the cards is a pan India branch network of 750 and a workforce of 12,000. By March 2015 we would migrate from a medium sized bank to a large bank. We would like to scale up our branch banking business which includes the SME piece, micro enterprises, consumer banking and wealth management and take it to about 60% of the loan book from five% currently. The remaining 40% would be split between large and mid corporates. We also want to ensure that our borrowings from the wholesale market would be down to 7% from the current 10%.
When will you be a full service retail bank?
We will launch retail assets without a credit card offering in March 2012 with a thrust on growing liabilities. We will have marketing tie-ups with other banks to provide various loan products rather than manufacture products.
Do you have any plans to raise fresh capital?
We will raise funds to the tune of $500 million through an American Depository Receipt(ADR) by the end of next year. We are keen on an overseas listing. In 2011-12 our priority would be to set up branches in Singapore and the Dubai International Finance Centre.
What is your exposure to the MFI sector and are you open to restructuring these loans?
Our advances to the MFIs, including pool buyouts, are at 0.97% of total advances, across 15 borrowers. To the Andhra Pradesh MFIs we have an exposure of about 60 crore. I am of the view that if the restructuring leads to economic value preservation we should do it.
The RBI is in the process of issuing new bank licence. What does this mean for medium sized banks like you?
New bank licenses would create dissonance. At present, there would be around 15 banks in the country that need to be reinvigorated since their brands are underutilised. In the next four years we should look at beefing up their capital. It would take about two years at least for the RBI to issue licenses and it would be sometime before they start operations. However, competition is good.
You have built a greenfield bank, would you consider existing your investment?
As and when the bank raises fresh capital there would be dilution in my holding. I am not selling my stake. Till we do not build a world class institution we would not be ready to amalgamate or be ready for a sale.
Did the global crisis throw up greater challenges for you considering you were in the growing mode?
We began operations in 2004 and it has been a dream run since then with the bank raising funds from private equity players, an IPO and a private placement. The global crisis was a shock of sorts and we focused on improving our risk and liquidity management and costs. We ensured that our management had the tenacity to handle these risks. As such, we saw a the best performance in second half of 2010-11, reflected in our revenues, margins and costs. As a consequence of those three years between 2008 ans 2010, we are now a leaner, efficient and agile organisation.
What steps did you take to manage the various risk?
We began diversifying our liabilities base and stepped up provisioning to ensure that we had enough of a buffer on account of our pool of profits. We brought in about 175 management cadre professionals through lateral recruitments from banks and the services sector. To manage costs, we renegotiated vendor arrangements and also flattened the organisation.
