E. Mervyn Davies, Group Chief Executive, Standard Chartered Plc: 23 ways to display his bullishness on India

When a CEO has visited India as many times as 51-year-old Mervyn Davies has in the past four years-23, to be exact-even the phrase "regular visitor" may not be an adequate descriptor. Put that down to the importance of the bank's Indian operations to the parent. On a recent visit, Davies attended a meeting of Standard Chartered Plc's board in Chennai, and hosted a dinner for customers in Mumbai to celebrate 150 years of Standard Chartered in India. BT's Roshni Jayakar caught up with the man in Mumbai. Excerpts from the interview:

Standard Chartered (India) contributes about 12 per cent to the group's profits. What are your growth expectations from the operation?

Standard Chartered is focused on emerging markets. We believe that the Indian economy has a bright future. Our brand is strong here. The integration of Grindlays was a huge success. We have an enormous talent base in the bank. We believe that India will continue to be an important part of the bank. I wouldn't be surprised to see India contributing 20 per cent of the group's profits in years to come.

Post the Grindlays acquisition, we have a big customer base (in India). We are expanding our branch presence here. We want to grow our card and wealth management business. We want to be a bigger wholesale bank.

The other business is (the) Shared Service Center at Chennai, which has grown from nothing to 1,700 people in 18 months. The hub does processing for (the bank's operations in) 30 countries. So India is going to be among the top three countries for the group in the next three years. I am bullish on India.

The global hubs in Chennai and the one in Kuala Lumpur must have helped the bank reengineer its cost base...

I think the mistake people make is in thinking that India is all about low cost. I don't think it is. To me, it is about high quality labour. Over 90 per cent of the staff at Chennai are graduates and you get higher service levels. I am looking for the global hub to be a centre of excellence. I want Standard Chartered to be famous across markets for high quality customer service. Chennai is about creating economies of scale and it is also about creating a centre with strong service levels. Over the next two-to-three years, we will double the size of operations in Chennai. We will also increase the size of (our) Kuala Lumpur operations-the other shared service centre. And we will gradually open up a centre in China.

What are your plans to build your China business?

I don't see India and China being in competition with each other. India is developing excellence in the service industry-systems development, information technology, outsourcing. China has gone on a slightly different route-manufacturing. There are restrictions on the sort of business you would want to do there. It is easier to do business in India. But, over the next 10 years, we would like to build a business (in China that is) the same size as we have got in India today. At present, we have taken a small stake in Bank of China; are opening branches; and are also looking to buy a Chinese bank.

What about India? Are you looking at acquisitions here?

We don't rule out acquisitions. But there is enough organic growth potential. I won't be happy till we are the biggest bank in India. Not just the biggest foreign bank.

The global economy is sputtering. Surely, that must be hurting the bank too?

You have war, problems in the pension industry because of low growth, and deflation in a number of economies. The whole world is going through a period of bad news. That does affect banks. The credit market worldwide is quite hostile. That's why it's quite good to come to India. The mood in India is different (quite optimistic) from that in the rest of the world. In 2002, we proved that we could grow despite difficult market (conditions). Now, again, we are optimistic.

Do you look at war as an opportunity?

There is an opportunity in every crisis. We have been looking to open a branch in Afghanistan. At present, we have no plans for Iraq. But who knows?

In the past few years Standard Chartered has acquired size globally, but it has also been considered a takeover target.

We are the leading emerging markets bank. We are the number one or number two foreign bank in each of our chosen markets. That is why we scaled down our operations in Latin America. We see a huge opportunity in Asia, Africa and the Middle East. As for being taken over, people have been talking about this for the past 150 years. As long as we continue to create shareholder value, we will continue to have an exciting future as an independent company. The Standard Chartered brand is stronger today than ever before. We have a strong balance sheet, capital base, and customer base. There is no talk now of people buying Standard Chartered. They talk about who Standard Chartered is going to buy?

You were in South Africa last month. Is it gaining prominence on Standard Chartered's global map?

Everyone talks about Hong Kong, Singapore, Malaysia and India. But, Africa as a continent is turning corner. In Africa, we are in 13 countries. In most of these countries-Botswana, Zambia, Tanzania, and Uganda-we are the biggest bank. There is more aid being pumped into Africa. Africa will grow in importance for Standard Chartered. We are upgrading our presence in South Africa from a representative office to a branch.

Prior to becoming the group chief executive, you were in charge of group-wide technology and operations. What role do you see technology playing in banking?

I don't think technology is all about the internet. It's about different channels of delivery. It is about telephone banking; it's about mobile banking; and it is about ATM (networks). The role of a branch is changing. A branch is (becoming) much more of a meeting place, a place to consult, more like a cappuccino coffee bar. As a bank, we want the customer to feel relaxed when he comes into our branch. And when he deals with us over the telephone and the ATM, I want him to think we are friendly and efficient. So, technology (in banking) will grow in importance. That is why we moving more and more of our systems integration and software development work to India.

What are your objectives for the bank, globally, and in India?

I want to improve our return on equity from 13.4 per cent to 20 per cent. I want to take the cost-to- income ratio, currently around 53.6 per cent, to below 50 per cent. I want our brand to be a household name in all of emerging markets. I believe the consumer business will get more and more successful as the size of the affluent segment grows in Asia, Africa and Middle East.

We have moved jobs to Chennai to re-engineer cost. To become a household name in India, we will be building our brand through advertising, being community-minded, and being a great bank to bank with. I am a great believer in customer (service). I want to make Standard Chartered a company that is famous for its service.