ICICI Securities to focus on institutional broking

ICICI Securities, the broking arm of India's largest private sector bank, is to focus on expanding its institutional broking business, at a time when competition in this space has intensified, with the entry of more players.

The firm operates the largest online retail broking business, under the brand name of ICICI Direct. It has so far been growing its retail broking and distribution and corporate finance businesses. Institutional broking currently has “insignificant share” in the company's earnings.

“In institutional broking, we have so far been a small player and that is where we have beefed up our team substantially in the last two months,” Chanda Kochhar, managing director and chief executive officer of ICICI Bank, told Business Standard. “Traditionally, we have been strong in retail broking and corporate finance. We have very high market share in these businesses and will continue to keep those strengths. We are now also looking at growing the institutional broking team and the business,” Kochhar, also chairperson of ICICI Securities, said.

Earlier this month, ICICI Securities appointed Jaideep Goswami as executive vice-president and co-head of equities. The appointment is part of the bank's aim to strengthen its institutional broking operations, as Goswami was previously heading that business at Daiwa Capital Markets.

Apart from Goswami, the broking firm also hired Varatharajan Sivasankaran as head of research of institutional broking. In the past two to three months, the institutional sales and research teams have also been strengthened with new hires. The company also has a new chief executive, Anup Bagchi, who took the reins in May.

The decision to focus on the institutional broking business also comes at a time when stiff competition and high usage of electronic facilities like direct market access have forced brokerages to reduce commission.

ICICI Bank's rival, Axis Bank, has acquired the investment banking and broking businesses of Enam Securities and will compete in this space through its arm, Axis Securities and Sales. HDFC Bank has also strengthened its team in HDFC Securities. YES Bank had said it would look to enter the broking business in the coming quarters. Multi-national corporations such as Barclays, Espirito Santo, Jefferies and Royal Bank of Scotland have recently beefed their teams in the institutional broking space.

In 2010-11 (April-March), ICICI Securities’ net profit narrowed to Rs 113 crore from Rs 123 crore a year before, due to shrinking brokerage income in volatile market conditions.