Stanchart To Keep Assets Flat, Raise Returns

Standard Chartered Bank (StanChart), the largest foreign bank in the country post ANZ Grindlays takeover, has adopted a three-pronged business strategy for India.

These are expanding the distribution network by about 45 per cent, go aggressive on branding by investing around Rs 50 crore and compressing assets to raise the return on capital.

The new avatar of Standard Chartered Bank has an asset base of Rs 29,000 crore. In his first interview after the merger was cleared by the Reserve Bank of India, StanChart's chief executive officer, India Region, Jaspal Bindra said: "The size of the balance sheet is not important for us. What is important is the return on capital. We are trying to keep the asset portfolio flat. The revenues will be growing but we would like to keep our asset base at around Rs 29,000 for at least two years."

 

The bank has started securitising both its retail and corporate assets. For creating new assets, the focus is on the retail sector which now accounts for 40 per cent of the bank's total assets. "There is pressure on margin on assets," Bindra said.

It is also geographically expanding the network. By the end of the next year, StanChart plans to grow the branch network to 80 from the current 61. Early this year it was 55. Even with the current branch network, StanChart is ahead of competition among foreign banks by a wide margin.

"We will continue to have an edge on distribution. We plan to expand to 25 cities from the current 15. We plan to increase our action in the next 15 cities and also increase our presence in the catchment areas in the metros. The geographical expansion is for two reasons -- for assets and liabilities," Bindra said.

The bank plans to go in for a heavy branding exercise. "We are building the brand and this will make a difference in the future. This year we are spending around Rs 50 crore. The budget will be increased next year. In its history, StanChart never spent in brand building in India," pointed out Bindra.

"Earlier, there were only few aggressive players in the market. Now everybody wants to have a share in the growing retail business. New players who are coming into the market also stepping up the competition. As the customer starts having more choices, brand will play a role. Though in the short run this is an offensive move, in the long run it is our defense," he added.

The bank plans to concentrate on the institutional brand of "StanChart" while Grindlays will be used for some products. It is in the processing of launching a campaign for the next Cricket World Cup.

The bank is also toying with the idea of using the Grindlays name as a sub-title in some of the erstwhile StanChart Grindlays branches which have been renamed as StanChart branches. The Grindlays brand name is being currently used in some of the mutual fund products and is being planned to be used in other products too.