Listing an interesting possibility but parent could prefer owning 100%: HSBC India CEO

Hitendra Dave, HSBC India CEO

HSBC India is being treated as priority market by its global headquarters, affirmed Hitendra Dave, CEO, HSBC India, in an exclusive conversation with Moneycontrol. He credited much of HSBC’s success in India to its lineage in the country and the good work of his predecessors which he has inherited.

“We are full of optimism on what we are sitting on. We acknowledge that we are very privileged to be having a customer base and a franchise, which some of the work we have done, but much of it we have inherited from our predecessors,” he said when asked what his plans are in the next three to five years for the bank.

Inorganic options?

While he is very positive that the bank will continue to expand in the country, especially in focus products such as wealth, international propositions and services to corporates, Dave said he is open to acquisitions in areas which converge with the bank’s vision. When asked if IDBI Bank or Yes Bank are in his radar, he seemed to dismiss the idea.

“Board at the highest level evaluates multiple organic and inorganic growth opportunities. India is a top priority market for the group. They (global executive committee) ask me if we had to continue to grow like our last three years which is a CAGR of 20 – 30 percent can you do it on your own or want to do something inorganically. For any large global organization in India, it's impossible to say, I will never do this (inorganic growth). But, obviously it's never right to say I'm open to everything. The answer somewhere lies in between,” he said.

No plans to convert to WOS

He also ruled out the option to convert from a branch operation model to a wholly owned subsidiary (WOS) in India. The central bank has made it mandatory for foreign banks entering India after August 2010 to adopt a wholly owned subsidiary model for its Indian operations. However, for banks already operating in India, WOS is not mandatory yet.

Responding to a query, Dave said: “These are discussions which we put up for periodic review in our executive committee. Once we get to a conclusion that there are opportunities within the customer set that we can deliver maximum value, at that juncture we will look at it”.
That said, given the bank’s present growth aspirations in India and the segment it plans to target, being a wholly owned subsidiary doesn’t offer much advantage.

“Our sense is in the legal entity shape that we have today, we are able to do justice to the market opportunity. Growth is not constrained for us. That's the current assessment. At some stage, if we come to a conclusion different to what we have today, that's when we will discuss,” he added.

Interestingly what he didn’t completely rule out, is the option of listing at some stage in HSBC’s journey in India. While he caveated stating that the question is “slightly above my pay grade,” when asked about the possibly of listing in India, he added “it's an interesting possibility, given the valuations in India”.

Indian market, according to Dave, is currently among HSBC’s top priority globally. “I’m sure they want to keep owning 100 percent of us rather than share it. But at some stage in the future, I cannot say no”.