With the economy showing visible signs of recovery and the markets bouncing back, State Bank of India (SBI) is planning to tap the fast-growing wealth management business in a major way. For this, the country?s largest lender is effecting realignment in the position of some of its subsidiaries. It is waiting for necessary approval from the government.
After deciding to float an exclusive subsidiary for the business, the bank is now in the process of taking over SBI Cap Securities Ltd (SSL), a wholly owned subsidiary of SBI Capital Market, the investment banking arm of the bank.
Also, the bank has decided to merge SBI Commercial and International Ltd (SBICI Bank), a wholly owned domestic banking subsidiary, with itself to bring about further synergy and efficiency. SBICI Bank functions as a private sector bank with high quality service and standards.
The bank also proposes to merge SBI Factors and GTFL, two of its subsidiaries, to improve market share in domestic and international factoring business, achieve greater synergy in operations and optimise efficiency.
Sources say all the proposals are awaiting necessary regulatory approvals.
In the new setup, SSL will be a direct subsidiary of SBI, imparting the bank greater synergy by undertaking broking activities and marketing of other wealth management products through State Bank Group channels.
The bank has already positioned relationship managers at strategic centres to extend personalised service to mass-affluent and high net worth individuals (HNI) clients and also for the medium enterprises clients.
SBI also has dedicated sales teams for home loans and multi-product portfolios to target niche markets and to up-sell and cross-sell various products. During 2008-09, the bank redesignated the business processes re-engineering (BPR) to leverage its core banking platform to improve performance in key business areas and quality of customer service. SBI has already installed BPR in 113 top business centres of the country.
According to a study by Cap Gimini and Merril Lynch, the wealth of Asia-Pacific HNWIs totalled $9.5 trillion, with India (22.7%), China (20.3%) and South Korea (18.9%) showing the fastest-growing HNWI populations. While growth prospects in the near term may be compromised by the global slowdown, the long-term potential of the Asia-Pacific HNWI marketplace remains strong with economies continuing to generate real and sustainable wealth on an unprecedented scale. Of late, there has been keen competition among foreign banks and non-banking finance companies set up by reputed industrial houses to tap HNI Indian clients and has prompted wealth management providers to look more closely at emerging HNWIs and ultra HNWIs, two groups which experienced significant growth both in terms of numbers.
Revamp time
•The bank is in the process of taking over SBI Cap Securities Ltd, a wholly owned subsidiary of SBI Capital Market, its investment banking arm
•SBI Commercial and International Ltd, a wholly owned domestic banking subsidiary, will be merged with the parent
•SBI Factors and GTFL is also proposed to be merged to achieve greater synergy