India accounts for 20% of StanChart’s global profits

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India accounts for 20% of StanChart’s global profits


Interest in IDRs

Interest is being generated in StanChart’s IDR (Indian Depository Receipt). Trading volume has increased in the last few days. But there is little change in the price of the IDR at around Rs.78. A broker was telling that investors were expecting some good news from Britain about the bank and that was the reason for the interest generated in its IDR.

Distress sale by Barclay’s

Recently Barclays has sold half of its credit card portfolio in India to Standard Chartered Bank. Through this, Standard Chartered Bank acquired 160000 credit card customers. The book value of the cards is around Rs.175 crore. Standard Chartered Bank acquired this portfolio at a substantial discount of around 45%. This is almost a distress sale by Barclays Bank. What is the trouble with Barclays Bank? As I have taken the assignment of this article to write about Standard Chartered Bank, I do not want to dwell into this question here at this time. Maybe I may write a separate article about state of affairs in Barclays Bank.

Targeting the youth

Earlier, Indusind Bank acquired 20000 cards of Deutsche Bank with a book value of Rs.224 crore. But in case of Indusind Bank, the arrangement made was that all the existing credit card loans belonged to Deutsche Bank and all the new loans will belong to Indusind Bank. Standard Chartered Bank wants to increase takeover financing in India. Standard Chartered Bank has appointed V Shankar as its Group Executive Director. Standard Chartered Bank is eyeing the young people of India with its ‘new way’ banking. It aims to attract 10-15 million youths. According to this ‘new way’ banking concept, young people can design their own credit or debit cards online with their photos. Customers can chat over the Net to virtual bankers for finding financial solutions. Standard Chartered Bank is partnering with MasterCard to offer location-based rewards to the customers.

100 million internet connections in India

There are 100 million internet connections and 670 million mobile users in India. It is growing fast every day. Standard Chartered Bank is planning to tap these two and have a significant share of it in the online and mobile banking. Nearly 7% of the bank’s clients use mobile banking whereas 35% use net banking. There is a vast scope for increasing this percentage and tapping business. Standard Chartered Bank has deep roots in countries like South Africa, China, Hong Kong and Singapore among other nations. Now Standard Chartered Bank wants to entrench itself deeply in India also through technology and tapping the youth.

Using social media sites for customer service

Standard Chartered Bank has planned to use social media sites in order to improve the quality of its customer service. The bank says that in about a decade’s time, IDRs will form an important component of its banking business. But what is causing concern is that the bank’s income from Indian operations is falling continuously. In the first half of 2011, the operating profit of its Indian branches declined by nearly 40% to $378 million.

Bonanza from Harshad Mehta

Standard Chartered Bank is focussing on credit cards business. It has begun online approval of cards. The bank feels that there is an improvement in the credit environment and delinquency rate has dropped. I doubt whether this perception is correct. Credit card business is always wrought with high risk. Standard Chartered Bank has got Rs.346 crore from Harshad Mehta assets. Remember Harshad Mehta? Two decades back he was the unsung hero of all the business journals and financial newspapers. They projected him with a cover story. It lasted till the bubble burst and poor Harshad Mehta died in prison (or was he finished off to gag his mouth?). Standard Chartered Bank has been appointed as a custodian of EPFO securities by the Central Board of Trustees of EPFO.

Private equity fund

Standard Chartered Bank has a private equity fund. Jaisingh is the co-CEO of the fund. The private equity fund invested $56 million in Varun Beverages, which is engaged in the business of bottling, marketing and distribution for Pepsi’s products. The private equity fund raised its stake in Redington to 11.9% for Rs.356 crore. The private equity fund invested Rs.110 crore in Bush Foods. The private equity fund invested Rs.850 million in Privi Organics.

Lending irregularities

It is rumoured that RBI spotted some lending irregularities with the bank and because of this the bank shuffled its senior executives. The bank denied this but there is no fire without smoke. Standard Chartered Bank is the only foreign bank to get a listing in the Indian stock exchanges through issue of IDRs. Standard Chartered Bank wants a clarification from SEBI about the terms of conversion of the IDRs. Standard Chartered Bank has entered top three equity deals club. It seems hiring of the experienced dealmaker Rajagopal from UBS has done benefits to the bank. Standard Chartered Bank has taken a 3% stake in United Stock Exchange.

Punishment transfer to Singapore?

Standard Chartered Bank was sued in Singapore over Madoff Feeder Fund. Two Dubai-based investors in Singapore claimed that they lost $10 million after being misled into investing their money in funds that channelled money to Ponzi scheme operator Bernard L Madoff. Actually this act was not done by Standard Chartered Bank but by American Express Bank. But Standard Chartered Bank acquired American Express Bank later. In Indian Bank, an officer will be punished by posting him to Vakkadai branch. Similarly hereafter in Standard Chartered Bank an officer can be punished by posting him to Singapore. Anyway Standard Chartered Bank’s headcount has dropped by 800 in the first quarter

Whatever it maybe, India has beaten Hong Kong to emerge as Standard Chartered Bank’s top profit centre. The bank’s India profit accounts for one fifth of the group’s global profits. It sees a good prospect of growth in the coming years.

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