| Kamath: Ready for the foreign safari
Mumbai, Aug. 7: ICICI Bank, having consolidated its business at home, is ready for an overseas expansion that will cost it $120 million initially when it brings subsidiaries in UK and Canada under its own fold.
The plan, which aims to lure retail and corporate customers, includes setting up of an offshore banking unit in Singapore and opening representative offices in Dubai and Shanghai. In the US, where it already has a representative office, the bank will spread its wings, but will do so only in the second phase.
Managing director and CEO K. V. Kamath told reporters at the inauguration of the bank’s first offshore banking unit (OBU) in Mumbai’s SEEPZ special economic zone that tasks at home were almost over. He was pointing to the large investments made in technology, ATMs, call centres and other customer-delivery channels. “Domestically, all systems are in place, and the next challenge is to emerge as a global entity.”
Joint managing director Lalita Gupte said the bank’s UK subsidiary alone will require $50 million. The Canada arm will need a seed capital of Canadian $ 5 million, while a planned Singapore offshore banking unit will take $10 million. A phased expansion in these countries later will cost more.
The UK and Canadian subsidiaries will kick off with 25-30 employees by the end of this calendar year. The first branch in Toronto will lead the way for more in future. Underpinning that is an improvement in Canadian-Indian trade ties, besides the strong links it has with banks already doing business in the US and Canada.
China, too, is rife with potential, and the surge in two-way trade with many Indian companies represents a tempting proposition. “China is an important step in globalising our operations,” Gupte added.
Senior general manager and head (international banking) Bhargav Dasgupta said the focus abroad will be on non-resident Indians there, but natives will also be served. “Indian companies are going global. We will bring competitive products and services in the foreign markets.”
Only a handful of public sector banks — SBI and Bank of India are the big two — have a presence overseas. ICICI Bank wants to slip into that untapped space.
Kamath, who has played a vital role in catapulting ICICI Bank to the top league, was confident that all foreign ventures would break-even in the “shortest possible time”. Asked to specify, he said it could be a year.
On the latest trends in the domestic economy, he felt demand for working capital will rise in the months ahead, the optimism based on strong corporate scorecards.
He said the bank has no plan to cut interest rates despite the recent decline in the yield on the benchmark 10-year government security by 10-15 basis points.