Stanchart-Grindlays Merger Gets Green Signal

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The Reserve Bank of India (RBI) has cleared the decks for the formation of the largest foreign bank in the country by giving its nod to the merger of Standard Chartered Grindlays (former ANZ Grindlays in India) with StanChart.

StanChart had formally approached the RBI around three months ago for the amalgamation of StanChart Grindlays with itself. The bank is likely to complete the merger of the businesses of the two banks by the end of this month.

Standard Chartered had taken over Grindlays business in India in April 2000. It had acquired ANZ Grindlays Middle East and South Asia operations for $1.3 billion making it the largest foreign bank in the country.

Post merger, StanChart is planning to use the Grindlays name for some of its products like that of mutual funds. It has been booking the retail assets of the group in India under Standard Chartered while the retail liabilities are under StanChart Grindlays.

StanChart Grindlays had posted a loss of Rs 393 crore for the year ended March 31,2002. This was due to a Rs 506.5 crore out-of-court settlement with the National Housing Bank related to the 1992 securities scam.

StanChart, on the other hand, shown a 107 per cent growth in net profit to Rs 384.6 crore as against Rs 185.4 crore in the previous year.

The StanChart Group has the largest number of branches in the country with 61 branches and has got licence from the RBI to add 5 additional branches.

The Standard Chartered Group now has a combined head count of around 3,300 of which around 350 are the non-managerial staff.

It has cut the flab drastically through a series of voluntary retirement schemes (VRS) implemented over the last one year.

StanChart trimmed its employee strength by at least 1,700 or around a third of the combined employee strength of StanChart and Standard Chartered Grindlays Bank.

The bank also plans to continue to add new employees for its global processing centre at Chennai. The cut in flab has gone hand in hand with a rationalisation of branch network.

StanChart had sought the Reserve Bank of India's permission opening 10 new branches. At the same time, it planed to close seven branches while three branches are being sold.

The retail segment continues to be the engine of growth for the bank. From scratch in 1997, StanChart's retail business now accounts for 40 per cent of the total profit of the bank.

In a few years time, it expects to push it up to 60 per cent. Within the retail segment, credit cards and the wealth management business (mutual funds, loans against shares, demat etc) contribute the maximum to revenues.