StanChart Plans Bank, NBFC Buys

Mumbai, Aug 24 | Updated: Aug 25 2004, 05:48am hrs
Standard Chartered Bank, the countrys largest foreign bank, has expressed its intention to acquire another bank to expand its business and retain its leadership position. This comes even as the bank readies to launch a non-banking consumer finance company.

Said StanCharts group executive director, consumer banking, Mike Denoma: We would do whatever is needed to retain our market leadership. This would include acquiring another bank as well as launching products that will cannibalise the existing products in order to give the customer a better proposition.

He said the bank was very vigilant for opportunities, and would be an active bidder if the acquisition would be value-creating, and would be available at the right price. Meanwhile, the bank is awaiting a clearer picture regarding RBIs draft proposal to limit foreign holding in private banks to 10 per cent.

Stating that such regulations would affect all banks plans for inorganic growth in the country, Mr Denoma said: Our ambition in the long term is to manage the banks that we invest in. It is not our strategy to invest in banks that we cannot manage. The bank has communicated their concern to the RBI regarding the draft proposal.

Our ambition in the long term is to manage the banks that we invest in. It is not our strategy to invest in banks that we cannot manage
Said StanCharts chief executive officer, Christopher Low: Our concern is that such restrictions would limit a banks capacity to raise capital, which we have communicated to the RBI.

The bank is also planning to launch a non-banking consumer finance company shortly, and may consider acquiring an NBFC to establish its market presence, Mr Denoma said at the launch of StanCharts new credit card - Manhattan.

He said: We are looking at acquisition right across the NBFC sector in India. It is a part of StanCharts global strategy to enter the consumer finance business. The bank has already acquired an NBFC in Hong Kong, the deal for which would be finalised by end-August.

The consumer finance company will offer unsecured loans to individuals having an annual income as low as 35,000, and to individuals who are normally served by loan sharks and extortionists. The upper limit would be for individuals of an income of upto Rs 2 lakh per annum. The loans would be available at higher interest rates but with shorter tenures.

The global credit card, Manhattan, would provide customised pricing with interest rates varying from 1.99 per cent to 2.49 per cent depending on the credit performance and repayment record of customers and the utility level of the card. The credit card is targeted at the fast growing ambitious, upwardly mobile customers in the age group of 25-30 years.