Barclays mulls Rank merger with Indian arm

The Barclays Group proposes to merge the non-banking finance company (NBFC), Rank Investments and Credits (India), with Barclays Holding India (BHIPL). BHIPL would become the holding company for Barclays Bank's future non-bank ventures in India.

Rating agency Crisil, in the recent credit rating assigned to Rank Investments and Credits' equity-linked debenture issue, stated, "The rating is driven primarily by the fact that Barclays Bank (rated 'AAtable/A-1+' by Standard & Poor's) holds a 99.96 per cent stake in the company. Crisil has factored in the integral role that Rank Investments is expected to play in Barclays Bank's strategy for India. Support from such a strong parent offsets the impact of uncertainties arising from the company's status as a new entity that is yet to commence operations.''

"The rating also derives strength from the fact that, going forward, Rank Investments will carry the Barclays' name as the group proposes to merge it with Barclays Holding India Private Ltd (BHIPL). The merged entity will become the holding company for all future ventures of the Barclays group in India,'' added Crisil.

In August 2006, Barclays Bank, UK, had acquired a controlling stake and management control in Rank Investments and Credits. The stake was enhanced to 99.96 per cent after the infusion of fresh capital of $42.50 million in 2006-07.

The bank is in discussion with minority shareholders to buy out the remaining stake. Rank, a systemically important non-deposit taking NBFC, had an asset base of Rs 18,300 billion as on March 31, 2007.

"The Barclays Group is widening its footprint in retail and corporate lending segments in India. While the bank is focusing on retail banking and has recently launched credit cards and personal loan products, Rank Investments will complement the banking activities through corporate lending,'' said Crisil.

Rank Investments will benefit significantly from Barclays Bank's inputs on treasury, credit analysis, legal processes and systems.

It will also inherit the strong risk management processes and systems of the Barclays group.