Jaspal Bindra CEO, India Region, Standard Chartered Group

THE NEW STANDARD CHARTERED TOTAL ASSETS Rs 29,291 cr OPERATING INCOME Rs 1,908.60 cr NET PROFIT Rs 642.32 cr NUMBER OF BRANCHES 61 NUMBER OF EMPLOYEES 3,600 PERSONAL LOANS RANK #3 CREDIT CARD RANK #1 in terms of receivables AUTO LOANS RANK #3 DEPOSITS RANK # 1 among foreign banks INVESTMENT SERVICES RANK #1 among banks

They wasted little time on celebrations. On October 14, 2002, a month and a half after the Indian operations of Grindlays finally merged with Standard Chartered Bank, Jaspal Bindra, the 42-year old CEO of the bank, and his nine-member management committee, were closeted in a conference room in an up-scale Mumbai hotel. The two-year long integration process was history and it wasn't that Bindra's Ten had gathered to discuss. What they did, trading numbers, arguments, and counter arguments over a meeting that lasted nine hours were the Bank's targets for the next year and its gameplan for the future. "We looked at Y2004 and Y2005 in terms of financials and activities," is the colourless explanation Bindra proffers, but chances are, three years from now, anyone setting out to chronicle the success (or failure) of Standard Chartered's radical growth strategies will start with the October 14 meeting. The possibilities discussed ranged from a mass-market foray to new products to a diversification into happening new segments such as Business Process Outsourcing (BPO).

The numbers are in favour of such out-of-the-box thinking. The new Standard Chartered Bank is India's largest foreign bank with assets of Rs 29,291 crore and 61 branches and 74 atms across 15 cities. Excluding the extraordinary items in its profit and loss account-Rs 506.54 crore that was paid to National Housing Bank, a claim on Grindlays dating from the messy days of the Harshad Mehta stock market scam, and Rs 144.32 crore burnt on severance packages over the past two years-the bank made a net profit of Rs 642.32 crore in 2001-02. That makes it the third most profitable bank in India, after State Bank of India and Canara Bank. And it makes it the second most profitable multinational in the country, after much admired consumer products heavyweight Hindustan Lever Limited. "The merger has taken us to another league," gushes Bindra. "It adds to size, brand equity, and the ability to attract talent." With a goal of operating profits of $275-300 million (Rs 1,347-1,470 crore) by 2005 from $150 million (Rs 735 crore) now, Bindra will need all that, and a bit more.

Anuroop 'Tony' Singh Country Head, ANZ Grindlays, Circa 2000

ANZ GRINDLAYS The first branch of ANZ Grindlays opened for business in India in Kolkata in 1854. By 2000, Grindlays was the third largest foreign bank in India in terms of assets. Its strengths included a strong brand recall, a broad distribution channel, and a large corporate banking business. Although it was larger than Standard Chartered, its profitability had suffered in recent years. The ANZ Group brought in Anuroop `Tony' Singh as CEO in December 1998 to restructure the bank. In effect, his mandate was to dress the bride up for sale. TOTAL ASSETS Rs 11,498.16 cr OPERATING INCOME Rs 1,463.06 cr NET PROFIT: Rs 180.13 cr NUMBER OF BRANCHES: 39 NUMBER OF EMPLOYEES: 3,250 COMPETITIVE POSITION: Third in terms of total assets after Citibank with total assets of Rs 14,172 crore and a net profit of Rs 251.34 crore and HSBC with assets of Rs 12,666.08 crore and a net profit of Rs 121.59 crore.

So We've Successfully Merged; Now What?

Visions of retail greatness, that's what. Circa October 2002, consumer banking accounts for 51 per cent of the revenues of the bank, and 28 per cent of its profits; the rest comes from what Standard Chartered terms wholesale banking, a term that encompasses corporate and institutional banking services, and treasury operations. Vishu Ramachandran, the Regional Head of the bank's consumer banking operations-he returned to India in January 2002 from Standard Chartered's Singapore operations-sees that revenue-share going up to 60 per cent in five years.

That will mean a significant increase in the number of Standard Chartered's retail customers; it currently has 1.8 million. If that's not challenge enough, the bank aspires to be within the top three players across products such as credit cards, personal and auto loans, deposits, and investment services, expand operations to 25 cities from the existing 15, and engage customers with new product offerings. Phew!

"Building a profitable share in each is key," says Ramachandran who hopes to "leverage the (credit) card franchise, establish a leadership position in mutual fund retailing and investment services, and expand the bank's footprint" to achieve this. There are specifics as well: remain the country's largest credit card company in terms of receivables (that's what we owe them) launch more co-branded cards, retain share of the car-finance business at 15 per cent of new flows, increase its share in the housing loan business from around 5 per cent to 12 per cent and that in personal loans from 20 per cent to 25 per cent.

Both Bindra and Ramachandran are hoping that NRI business-the bank has a significant presence in NRI-rich West Asia, Africa, and South-East Asia-the planned expansion to 10 more cities, and a focus on the SME (small and medium enterprise segment), will help Standard Chartered's retail cause. Standard Chartered even has a finger in the online banking pie, although the business is unlikely to contribute much either to revenues or profits in the near future. With most customers still expecting a paper trail of their activities, internet-banking, "isn't a revenue-generating model," admits Bindra.

While retail will be the way of the future, the bank isn't ignoring its corporate business altogether. Courtesy Grindlays' strong corporate banking business, Standard Chartered boasts relationships with over 800 top corporates. Here, the bank's large capital base enables it to provide the largest local currency limits amongst private sector banks. Rajan Ray, the Regional Head of the bank's corporate and institutional banking business-he moved from ABN Amro in June 2001-says the focus is on "just-in-time kind of banking where corporates look to a bank for end-to-end solutions". Ray heads a new group created to identify these solutions. The immediate growth opportunity, Standard Chartered believes, lies in facilitating off balance sheet transactions such as securitising receipts.

Harpal Duggal Head, Consumer Banking, Standard Chartered Bank, Circa 2000

STANDARD CHARTERED Standard Chartered wasn't as large as Grindlays in India, but by 2000 it boasted a stronger retail presence. It was far more profitable than Grindlays, though, and under a new Global CEO Rana Talwar was scouting for acquisitions that would make it the leading bank in emerging markets. In India, the bank's consumer banking operations were headed by Harpal Duggal, and its corporate banking issues by Jaspal Bindra. However, the merged entity could have only one CEO. Bindra it was. TOTAL ASSETS Rs 9,106.98 cr OPERATING INCOME Rs 1,196.60 cr NET PROFIT: Rs 185.36 cr NUMBER OF BRANCHES: 19 NUMBER OF EMPLOYEES: 1,900 COMPETITIVE POSITION: Stanchart ranked fifth assetwise after Citibank, HSBC, ANZ Grindlays and Bank of America.

Treasury operations complete the wholesale banking business of Standard Chartered. M.A. Ravi Kumar, a Citi alum who joined the bank in August 2001, heads what must surely be the largest treasury operations among banks operating out of India. His objective is to offer innovative solutions in the area of exposure management. "In the next two years, between 25 per cent and 50 per cent of our revenues will come from products we don't currently offer, and customers we don't currently service," says Ravi Kumar. Rupee options are a case in point. India's central bank, Reserve Bank of India, is yet to clear its launch in India, but Standard Chartered has had its offering ready this past six months.

Here's Where The Merger Kicks In

Size matters. Just ask Soumen Basu, Chief Operating Officer of the bank. "The biggest advantage of hubbing the processes comes from scale; costs come down, productivity improves, and everything is standardised across the bank". Basu's reference is to Scope International, the bank's global processing hub that serves 11 countries, including India out of Chennai. Thanks to the process efficiencies brought about by Scope, turnaround time for key customers is down from a minium of 24 hours to a few hours. "Eventually, the bank is all about being able to create a proposition for the customer," explains Sanjeev Agrawal, CEO, SCB, and CFO, India Region. In the mortgages business too, the merger has endowed the bank with a significant presence.

Standard Chartered, says Ashvin Parekh, Executive Director, Deloitte Haskins, has displayed, "an appetite for growth". "It has been quick to take up initiatives that will help increase its customer base." However, the emphasis on the credit card business could hurt the bank by increasing its level of Non Performing Assets.

It may have a new colour co-ordinated logo, it may be fuelled by a high-decibel advertising campaign-unaided recall is up 8 per cent and top of mind recall by 100 per cent since June, when it was released-and it may have signed on former cricketing ace Kapil Dev as a brand ambassador, but Standard Chartered will face intense competition (it already does) in its efforts to become a retail heavy-weight.

Citibank, the largest foreign bank till the Standard Chartered stole that distinction, has a network of 20 branches across 13 cities and a credit-card base of 1.5 million. Its retail gambit is supported by its branches, 114 ATMs, and remote distribution channels such as internet and telebanking. Then there is Suvidha, its mass-market banking offering that has helped it tap the mass market.

Bindra's core team: "They've lost people," is a statement one often hears in association with the new Standard Chartered. While the bank has cut a couple of thousand jobs, CEO Jaspal Bindra (seated, centre) has managed to build a core team, Seen here, (L to R) are, Soumen Basu, COO, M.A. Ravi Kumar, Regional Head (Global Markets) India and Nepal, Sanjeev Agrawal, CEO, SCB India and CFO, India Region, Chandrashekhar Pingali, Regional Head (HR), India and Nepal, Vishu Ramachandran, Regional Head (Consumer Banking), India, Rajan Ray, Regional Head (Corp. and Institutional Banking), India, Rajeev Uberoi, Regional Head (Legal and Compliance), India and Nepal, Ajoy Veer Kapoor, Regional Head (Strategic Sourcing and Corp. Real Estate), India and Nepal, Neel Chatterjee, Regional Head (Corp. Affairs)

Among Indian banks, Standard Chartered faces competition from the glimmer twins of retail banking: HDFC Bank with its 206 branches and 625 ATMs across 106 cities; and ICICI Bank with 409 branches and 1,066 ATMs across 145 cities. ICICI Bank's mantra for growth is retail, and in two years, retail assets are expected to account for two-thirds of its loan book. Says Rana Kapoor, Managing Director, Rabo India Finance, "There are formidable players in the retail segment with deep pockets. As a bank like Standard Chartered gets into the top gear, it will have to look at strategic differentiation through cutting-edge product development, highly responsive sales and marketing effort and quality service standards. HDFC Bank and ICICI Bank are already busy creating a mindspace for themselves."

The competition doesn't faze Bindra's Ten. Even in the two years the integration process lasted, the bank grew, launched new products, and opened more branches. "We are tiny right now," admits Bindra. "But if you build the right brand awareness, provide the right quality of service, manage your risks well, and have the right acquisition models for both wholesale and consumer banking business, then there is no limit to growth." Wait for the sequel, then.

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