UBS bites the dust in India

Just like all the other big banks.

"Another one bites the dust". UBS is the latest in line of big western banks to be exiting the Indian wealth management industry. UBS will also be winding down its foreign exchange business in India as part of its global strategy to conserve capital.

A UBS spokesperson told Private Banker International that, over a span of two years, the Swiss banking giant will shut its single branch in Mumbai and "concentrate on its core businesses" rather than on capital intensive businesses, even though it is keeping its corporate client service division (including M&A, equities and debt capital market services) intact in the country.

Quite recently, Morgan Stanley surrendered its wealth management unit in India by selling it to Standard Chartered. Previously, Goldman Sachs also exited India’s wealth management arena. 

What makes India such a difficult market to survive in for foreign players?

Like most countries across the globe – now more than ever – regulation is a key concern, one that is amplified when it comes to India. With high entry barriers and a wing-clipped approach to the product universe, the Reserve Bank of India only keeps tightening controls.

This year, in the annual monetary policy statement on May 3, the RBI proposed a new banking structure involving differentiated licencing regime for domestic and foreign banks instead of granting a universal banking licence.

Beyond regulation, however, a bigger factor may be the fact that nuances around how the wealth management business, particularly, works in India is actually quite local.

A market like India has a number of things going for it. According to the World Wealth Report 2013, released by Capgemini and RBC Wealth Management, India experienced 22.2 per cent growth in its HNIs population, second only to Hong Kong in the Asia Pacific region.

But the key to understanding and thriving in a market like India is to have a deep rooted view of the local sentiment and clients’ trust that local banks have.

Indian family offices have a bigger trump card having handled key rich families’ wealth over generations, but the trust factor that local private sector banks such as ICICI, HDFC, Axis Bank, Kotak Mahindra Bank, to name a few, have achieved is tough to compete with. And they are catching up with global best practices fast.

Another factor that gives local banks an edge, perhaps, is the fact that India is a completely onshore market, everything being rupee denominated, and the investment products on offer are still relatively basic, unlike Western mature markets.

When I spoke to Atul Singh, managing director and head of global wealth and investment management for Merrill Lynch in India, back in 2011 for a feature, he told me that foreign banks such as Merrill Lynch, Barclays, JP Morgan, Citibank, and Credit Suisse, being experienced players globally, have taken the lead in developing innovative products targeting the HNWI and UHNWI. But the challenge in India, as an industry, is "how to make money from assets" due to the product universe still being fairly vanilla.

It’s not just India that is difficult to deal with, though. Russia is even more notorious for western bank exits, with Barclays and HSBC quitting retail and commercial banking operations in the region over the last couple of years. Reason? Local banks’ dominance, with most of the market share taken by Russia’s largest lender by assets, Sberbank, followed by VTB.

French bank Societe Generale’s Russian subsidiary, Rosbank, has been in the limelight for the wrong reasons recently with its CEO, Vladimir Golubkov, being fired and acquitted on bribery charges. But SocGen, being one of the few foreign banks still holding its ground in the statedominated banking sector, has shown optimism with its chief executive, Frederic Oudea, saying the lender aims to deliver a "sustainable return on equity of over 15 per cent" in Russia by 2015. Let’s see.

As for India, it will be interesting to note how local banks up their ante with another Western lender exiting, mould themselves to further regulatory changes, and how the other remaining foreign banks make space for themselves and the global approach they offer. "Pressure on people - people on streets". Queen really has said it all.

Photograph: Getty Images

Meghna Mukerjee is a reporter at Retail Banker International

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How the Lib Dems learned to love all-women shortlists

Yes, the sitting Lib Dem MPs are mostly white, middle-aged middle class men. But the party's not taking any chances. 

I can’t tell you who’ll be the Lib Dem candidate in Southport on 8 June, but I do know one thing about them. As they’re replacing a sitting Lib Dem (John Pugh is retiring) - they’ll be female.

The same is true in many of our top 20 target seats, including places like Lewes (Kelly-Marie Blundell), Yeovil (Daisy Benson), Thornbury and Yate (Clare Young), and Sutton and Cheam (Amna Ahmad). There was air punching in Lib Dem offices all over the country on Tuesday when it was announced Jo Swinson was standing again in East Dunbartonshire.

And while every current Lib Dem constituency MP will get showered with love and attention in the campaign, one will get rather more attention than most - it’s no coincidence that Tim Farron’s first stop of the campaign was in Richmond Park, standing side by side with Sarah Olney.

How so?

Because the party membership took a long look at itself after the 2015 election - and a rather longer look at the eight white, middle-aged middle class men (sorry chaps) who now formed the Parliamentary party and said - "we’ve really got to sort this out".

And so after decades of prevarication, we put a policy in place to deliberately increase the diversity of candidates.

Quietly, over the last two years, the Liberal Democrats have been putting candidates into place in key target constituencies . There were more than 300 in total before this week’s general election call, and many of them have been there for a year or more. And they’ve been selected under new procedures adopted at Lib Dem Spring Conference in 2016, designed to deliberately promote the diversity of candidates in winnable seats

This includes mandating all-women shortlists when selecting candidates who are replacing sitting MPs, similar rules in our strongest electoral regions. In our top 10 per cent of constituencies, there is a requirement that at least two candidates are shortlisted from underrepresented groups on every list. We became the first party to reserve spaces on the shortlists of winnable seats for underrepresented candidates including women, BAME, LGBT+ and disabled candidates

It’s not going to be perfect - the hugely welcome return of Lib Dem grandees like Vince Cable, Ed Davey and Julian Huppert to their old stomping grounds will strengthen the party but not our gender imbalance. But excluding those former MPs coming back to the fray, every top 20 target constituency bar one has to date selected a female candidate.

Equality (together with liberty and community) is one of the three key values framed in the preamble to the Lib Dem constitution. It’s a relief that after this election, the Liberal Democratic party in the Commons will reflect that aspiration rather better than it has done in the past.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

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