Foreign Banks in India: Building franchises without savings incentives

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As HSBC , Citi and SCB continue to target large private banking accounts in India they are unlikely to step up price wars in retail as all 3 are struggling to break even,. Others hardly have retail operations at all, Deutsche Bank also having sold its cards division to Indusind. Savings bank rates in the meantime have been upped at the new premier competitora , the  crop of private banks given licenses earlier this decade and last, with Kotak and Yes offering 6% on the daily savings balance computation alongwith Indusind esp on deposits above $2000 (Rs 1 lakh would translate oto $20k in PPP terms)

SCB’s 100 and HSBC’s 46 branches (incl any RBS branches allowed in 2012) as wlell as Citi’s branches are about to break even inr etail after the 2008 purge. Corporate and Transaction Banking continues to bely hopes in the September and December quarters as the falling rupee makes syndications in eCB/ FCCB impossible to justify for most India corporates hurting from the forex risk already on board

However growth in personal loans and other unsecured lending in the festive season as also the jump in debit

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card spends is likely to sustain With structured transactions their coup de detat in the Indian market their retail CASA ratios and “real lending” remains a lower priority with a CASA of nearly 45% in all 3 cases

SCB also lost minutea moiunts being bullish on the rupee in September 2011. Dealmakers have been shifting  mandates and jobs at foreign investment bank units with revenues down 40% for the year and the Indian market fee reduced to less than $500 mln iin 2011-12

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However, the talent is likely to stay with India / Asia given the new FDi regulations in retail and xpected soon in aviation. the interest from foreign PE firms also remains only temporarily suspended as FDI operational concerns and issues with standard safety clauses / control clauses awaited for resolution ( nomination of independent directors and rofr etc could trigger requirements for 26% open offer)