Letting Go

Between them Standard Chartered and Grindlays employed around 5,700 people. There were, on an average, two people for every available position. Right-sizing (forget the euphemism, it was simple pruning) was necessary.

Step I Bindra followed the guidline that neither of the two banks would account for more than 60 per cent of the jobs.

Step II The people offered separation packages were outplaced

Step III Communication overdrive

Step IV The integration committee insisted on hiring afresh. Among the new hires were Rajan Ray, the head of the corporate and institutional banking business and M.A. Ravi Kumar, the regional head of the bank's global markets operation.

The inevitable stories about a bloodbath followed. While it was true that everyone had to re-apply for his, or her job, Standard Chartered lost only two key employees: Harpal Duggal, who himself had a shot at the top post, and Jeswant Nair, Regional Head, Human Resources. Today, Standard Chartered employs 3,600, and has moved to a performance-oriented culture. "In the past," laughs Bindra, "we were nice to everyone." Nice guys come last.

Managing The Regulator

RBI's headquarters, Mumbai

India's central bank was concerned about the Standard Chartered-Grindlays integration. There had, after all, been no merger of a similar magnitude to set a precedent. "The regulator didn't just monitor or guide us," says Rajiv Uberoi, a former RBI and Grindlays hand who now serves as Standard Chartered's regional head of legal and compliance. "It even carried out an inspection of the bank in July 2002 and validated the fact that we were on the right track." For good measure, Bindra and Uberoi met with the central bank every month; every quarter, the duo made a presentation to the RBI Governor and Deputy Governor on the progress made in the integration process. In May 2002, the bank submitted a scheme of amalgamation-a sign that the integration process was almost done-to the RBI; the regulator approved the scheme in mid-August; and on August 31, 2002, standard Chartered announced the completion of its merger process.

Grindlays Garden, Chennai

Managing Real Estate

On October 31, 2000, 186 days after Standard Chartered announced that it was acquiring Grindlays in West and South Asia, the display outside all 39 Grindlays branches across 16 cities had changed. They now read Standard Chartered Grindlays Bank. Nearly 350 document formats, 500 lease agreements, 800 items of stationery and marketing merchandise were changed. Still, the new Standard Chartered, it was evident form the beginning, would have more space than it needed. Branches in cities such as Guwahati, Kanpur, and Shimla, more a legacy of history than a result of a pressing business need to be there, were shut. Space was divested, or repurposed, people relocated, and offices standardized. The result? The efficiency per square foot of space increased 25 per cent in the past year. And the divestment of between 800,000 sq. ft. and 10,00,000 sq. ft. of real estate fetched the bank Rs 110 crore. Not all excess real estate was sold. Grindlays Garden, in Chennai's up-market Haddows Road was repurposed into Scope, 550,000 square feet housing Standard Chartered's global processing hub. "We had been considering building a processing hub in India," says Ajoy Kapoor, "and this (Grindlays Garden) gave us the opportunity to realise our objectives sooner." Not everything, though, was about divesting and repurposing. Understanding the importance of keeping its people motivated in what was essentially an uncertain transition period, the bank used some of the space to create cafeterias, informal meeting rooms, and gymnasiums. Food heals.

Getting Systems To Talk

It's one bank now

It was a recipe for disaster: Standard Chartered followed a centralised processing model; Grindlays, a decentralised one. And while a centralised model has its advantages, a dc one does serve better in a few cases such as cash management. The new Standard Chartered didn't follow sweeping guidelines; instead, says COO Soumen Basu, it chose to let "business dictate IT needs". The bank also took its time, ensuring that everything was in place before effecting the integration of the two IT back-ends.

Thus, although the integration of the two credit card businesses happened in August 2001, the consumer asset businesses merged in February 2002, and the two banks became one legal entity on August 31, 2002, it was only on September 7 that the IT integration was achieved. That did mean some manual turnarounds-the world saw one bank, but there were two for these seven days, and their systems weren't ready to talk to each othe-and a two-in-one clearing house (put simply, a clearing house is where inter-bank cheques are processed) that processed 5-6 per cent of the cheques written in India every day. On September 7, 2002, the liabilities of the two banks were merged, and close to 600,000 accounts moved to one network. The new Standard Chartered had arrived.

THE RETAIL STRATEGY
We'll say it again, consumer banking is the growth engine.

• Strive to be among top three across product categories
• Increase participation in existing markets
• Expand presence to 25 cities from the existing 15
• Reduce cost-income ratio, which stands at 52 per cent today
• Focus on profitable relationships
• Balance portfolio by focusing on secured products, NRI business, and SMEs

THE MAN IN CHARGE

Jaspal Bindra: Overseeing complexity

Age: 42

Education: CA; MBA from XLRI, Jamshedpur

Track record: Before he became CEO, Standard Chartered Group, India Region, in August 2000, Bindra headed the bank's corporate business. A career banker, his CV includes stints at UBS, where he headed the structured finance, capital markets, and debt operation, and at Bank of America, where he held senior positions in corporate banking and set up the treasury operations in Mumbai and Delhi

Interests: The movies. Marilyn Monroe and Aishwarya Rai are his favourite leading ladies. And travelling, which he does plenty of, thanks to his job

Family: Wife Sumi, a homemaker and son, Amrit

THE INTERNATIONAL PERSPECTIVE

Patrick Gillam, Chairman, Stanchart: Does he prefer the quiet approach?

Standard chartered may be headquartered in London but make no mistake, it is an emerging markets bank. The leading one, actually. Indeed, the bank's presence in Europe and the US is largely to serve its Asian clients in those markets. Over the past decade, first under Malcom Williamson and then under Rana Talwar, it focused exclusively on growing its emerging markets business. Talwar, perhaps influenced by his years at aggressive Citi was responsible for two of the largest acquisitions in the history of the bank: of Grindlays in West and South Asia, and Chase's consumer banking business in Hong Kong. The second made Standard Chartered the largest credit card issuer in that market. And the first helped it become the regions largest bank, overtaking Citi and HSBC. By November 2001 Talwar was out, amidst speculation of a rift with the board and with chairman Patrick Gillam, largely a result, it was said, of Talwar's aggression. Mervyn Davies, the new CEO has overseen the integration across the two regions; today, the bank is reaping Talwar's whirlwind, and it isn't all bad.

WHAT COULD GO WRONG
Several spoilsports could scotch Standard Chartered's party.

• Aggressive growth in the retail segment could be accompanied by a rise in non-performing assets
• The bank's costs could rapidly go out of control as it expands aggressively
• The bank could find out that it takes a radically different business model to succeed in Tier II cities to which it is now expanding
• Size could prevent the bank from reacting quickly to consumer needs

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