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Douglas T. Nielson, Chief Country Officer of the Rs 550-crore Deutsche Bank India, and the man who set the bank up in India (back in 1980, before going off for an overseas stint), speaks to BT on what the bank has in mind, the market, and particularly its plans in the asset management arena. Equity research, as Nielson says, will emerge as a key differentiating factor in this business, and that’s exactly what Deutsche is working on. Q.
Despite operating in India for the last 22 years, why has Deutsche Bank
kept such a low profile? Is this deliberate? A. It would be incorrect to say that we have deliberately kept a low profile all these years. The reason many people haven’t heard about our brand, is that we don’t have a presence in retail banking, and don’t issue credit cards. So you will not find our hoardings at bus stops and such other places. However, the clients we deal with in terms of products and services—high net-worth individuals and corporate houses—know us well, and that is most important to us. Q. But, given the pressure on corporate lending spreads, why isn’t Deutsche Bank into retail banking? Isn’t that where the margins are? A. While it is true that retail banking may be the flavour of the times, with many new players getting into this sector, we are very clear about our goals. We do not want to enter the retail market now. The reason is clear. Deutsche bank is not a leader as far as retail banking is concerned. Though we have branches in many countries, it is only in Germany that we have offered retail banking services. We have deliberately kept ourselves out of the retail sector here because we believe that we cannot offer added value to the retail customer. Our expertise is in global markets, in treasury operations, trading business, bonds and so on. Q.
How important is India as a banking destination for you? A. India is a very important destination for us in Asia. Not only do we see enormous potential here, but we strongly believe that we can develop and mature the business for corporates here. We realise that there are a number of good corporates in the country who are looking to do business globally. Again, there are a lot of global investors who want to do business in India. So what we are trying to do is to help a few good Indian companies raise both equity and debt from European markets. In other words, we are here to find solutions to the financial problems of various Indian corporates. Q.
What are your future plans in India? A. We are planning to set up an asset management company in the country. It will be a separate company floated through a 75:25 joint venture with an Indian partner, with the majority stake being held by Deutsche Bank. We are also looking at the possibility of setting up investment banking services in India. Currently, all banking services are sourced from Singapore and Hong Kong, and advisors fly in from there to service clients here. But I don’t want to be too dependent on them for my India operations. I think it is time to have a presence in India. Finally, to supplement the investment banking business, we are also considering the possibility of setting up an equity research arm in India—to do on-the-spot research. At the moment, our equity research firm in Hong Kong conducts research on the Indian markets. But when the markets are down, I feel it is the best time to set up business. Q. With the Indian Government allowing 49 per cent foreign direct investment (FDI) in private Indian banking, are you planning to make any acquisitions in the near future? A. In the absence of a retail strategy, it makes little sense to acquire private Indian banks. From our perspective, the licence that we have allows us to do exactly what we want to do in the Indian market. So acquiring a private Indian bank is not on our agenda.
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