'India is a core strategic market for StanChart'
Partha Sinha & Shubham Mukherjee, TNN, Sep 4, 2010, 12.50am IST
Switching over to banking from FMCG may not be the career path a sales manager in the consumer goods space would choose for himself. But when the person in question is Neeraj Swaroop — for whom one of the key learnings from life is "take some risks with your career" — things are bound to be different. From interacting with people in small towns as a sales manager for Pond's to becoming a seasoned banker heading Standard Chartered in India, with stints in Citi, Bank of America and HDFC Bank, Swaroop has done it all. In an interview with TOI, he talks about the road ahead for Standard Chartered, its IDR, the Mumbai Marathon and the global economy. Excerpts:
The US 10-year rate recently jumped from 2.5% to 8%. How do you explain this disconnect?
Some economists are trying to explain imbalances which would have never crept into the world in the traditional economic sense, but have taken roots nonetheless. A large part of the world with the lowest rates of interests is almost facing deflation, and here we are in another part of the world facing high inflation and interest rates. So, if the market forces were to play it out on their own, this could lead to more capital flows coming into India because rates are higher here. This could lead to the appreciation of rupee, so the currency play could come in and, to that extent, the returns to currency appreciation would have been more normal to global rates than they are today.
But if this were to happen, it would depend on many other factors. If the dollar continues to appreciate against most currencies despite the fact that it has one of the highest interest rates within the normal economic sense, it should have led to the dollar depreciating. But the dollar is not depreciating because there is no other currency where people are willing to part with it.
I was looking at the IDR. You said that you have got a very strong ranking from the bank and it gives a local sense of branding to the bank. Local roots are already very strong dating back to over 150 years. But if the IDR doesn't do well, the bank gets a bad name. This is a risk, yes.
So, how do you address this issue?
First of all, we cannot insure market price. And for reasons much beyond our control and performance, the price could vary because it's trimmed the market. So, the way we look at it is that we don't control this in the UK and we don't control this in Hong Kong where we are listed. We were not living with that risk in India. Therefore, it is an additional risk we have introduced around a brand in India. But on balance, it felt that the game to the brand would simply outweigh this additional risk that we were buying into. And, we believe that is really the truth.
What's happening on the IDR branding front?
These are mere building blocks. One thing does not make your brand. We've been here for 152 years, and we have always been committed to the country. We have made an acquisition here earlier — that of UTI Securities. So, I am saying that we have given many signals to the people in the market, our customers, about our commitment to India. We had a stamp issued in our name by the government of India and we did the IDR. Our board came to India in 1997, much before other multinationals started holding their global board meetings here. All these signals convey that India is a core and strategic market for us and we recognized it probably earlier than some of the other multinationals.
So, if you look at it holistically, each of these factors has played a role in building up an international brand in India, which is committed to India. The IDR is the latest slice. But, it does not underscore the fact that you would not go about listing a parent in a market if you would have any doubts about it being your core market. The early feel is that policymakers, our corporate clients, our private bank clients — all of them recognize and are sensitive to the fact that we are here. Now in a mass sense, we are not really a mass brand that can trickle down to the average man on the street. Perhaps not or perhaps not enough, maybe. But that will take time.
As of now, how much does India contribute to the global revenue and profits?
In the first half of 2010, India has contributed approximately 20% profit. By profit, we are the single largest contributor to the group. We used to be number two till last year.
There are two things: one is the brand and the other is that it is not yet a mass brand. But, you connect very well with the masses, at least in Mumbai with the Mumbai Marathon. What is the idea behind the marathon?
Yes, in some of the markets, especially the metros, we are a mass brand. And when I say mass brand, I am talking about the masses of India as a whole. The Mumbai Marathon has been with us as a flagship. It is quite close to what the brand stands for.
The marathon is participative. It brings in all communities. It does not discriminate between the rich and the poor. It is a unifying event. It is a city event. We are very fortunate to be the sponsors of the event because its ownership is clearly with the city. It is not that the event becomes too big because we own it. We leverage it in the sense of that one of our strong streams of brand propositions is to do with community and participating with the community. We feel the marathon is the right platform to showcase that we use this platform to raise money for the underprivileged. If you look at the advertising around the Mumbai Marathon in the last two years, it has nothing to do with our product or what Standard Chartered does in the country. We haven't used it as a commercial platform.
What is the way forward for you?
Fundamentally, we are very confident yet cautious about the Indian economy. The financial services in India, by global standards, are under-penetrated. So according to any indicator—be it a percentage of GDP, percentage of population, percentage of income or you see the houses that are financed, cars which are financed—if you look at it by global standards, everything is under-penetrated. So we have a long way to go, for the industry to grow.
So how are we placed within these given parameters? What are the key ingredients required to grow and capture the opportunities? The key ingredients are capital, people and technology, which are the fundamental blocks. And then you have leadership and management. We believe we have all these ingredients. We have adequate focus and support from the group's board in London on leadership and management.
Partha Sinha & Shubham Mukherjee, TNN, Sep 4, 2010, 12.50am IST
Switching over to banking from FMCG may not be the career path a sales manager in the consumer goods space would choose for himself. But when the person in question is Neeraj Swaroop — for whom one of the key learnings from life is "take some risks with your career" — things are bound to be different. From interacting with people in small towns as a sales manager for Pond's to becoming a seasoned banker heading Standard Chartered in India, with stints in Citi, Bank of America and HDFC Bank, Swaroop has done it all. In an interview with TOI, he talks about the road ahead for Standard Chartered, its IDR, the Mumbai Marathon and the global economy. Excerpts:
The US 10-year rate recently jumped from 2.5% to 8%. How do you explain this disconnect?
Some economists are trying to explain imbalances which would have never crept into the world in the traditional economic sense, but have taken roots nonetheless. A large part of the world with the lowest rates of interests is almost facing deflation, and here we are in another part of the world facing high inflation and interest rates. So, if the market forces were to play it out on their own, this could lead to more capital flows coming into India because rates are higher here. This could lead to the appreciation of rupee, so the currency play could come in and, to that extent, the returns to currency appreciation would have been more normal to global rates than they are today.
But if this were to happen, it would depend on many other factors. If the dollar continues to appreciate against most currencies despite the fact that it has one of the highest interest rates within the normal economic sense, it should have led to the dollar depreciating. But the dollar is not depreciating because there is no other currency where people are willing to part with it.
I was looking at the IDR. You said that you have got a very strong ranking from the bank and it gives a local sense of branding to the bank. Local roots are already very strong dating back to over 150 years. But if the IDR doesn't do well, the bank gets a bad name. This is a risk, yes.
So, how do you address this issue?
First of all, we cannot insure market price. And for reasons much beyond our control and performance, the price could vary because it's trimmed the market. So, the way we look at it is that we don't control this in the UK and we don't control this in Hong Kong where we are listed. We were not living with that risk in India. Therefore, it is an additional risk we have introduced around a brand in India. But on balance, it felt that the game to the brand would simply outweigh this additional risk that we were buying into. And, we believe that is really the truth.
What's happening on the IDR branding front?
These are mere building blocks. One thing does not make your brand. We've been here for 152 years, and we have always been committed to the country. We have made an acquisition here earlier — that of UTI Securities. So, I am saying that we have given many signals to the people in the market, our customers, about our commitment to India. We had a stamp issued in our name by the government of India and we did the IDR. Our board came to India in 1997, much before other multinationals started holding their global board meetings here. All these signals convey that India is a core and strategic market for us and we recognized it probably earlier than some of the other multinationals.
So, if you look at it holistically, each of these factors has played a role in building up an international brand in India, which is committed to India. The IDR is the latest slice. But, it does not underscore the fact that you would not go about listing a parent in a market if you would have any doubts about it being your core market. The early feel is that policymakers, our corporate clients, our private bank clients — all of them recognize and are sensitive to the fact that we are here. Now in a mass sense, we are not really a mass brand that can trickle down to the average man on the street. Perhaps not or perhaps not enough, maybe. But that will take time.
As of now, how much does India contribute to the global revenue and profits?
In the first half of 2010, India has contributed approximately 20% profit. By profit, we are the single largest contributor to the group. We used to be number two till last year.
There are two things: one is the brand and the other is that it is not yet a mass brand. But, you connect very well with the masses, at least in Mumbai with the Mumbai Marathon. What is the idea behind the marathon?
Yes, in some of the markets, especially the metros, we are a mass brand. And when I say mass brand, I am talking about the masses of India as a whole. The Mumbai Marathon has been with us as a flagship. It is quite close to what the brand stands for.
The marathon is participative. It brings in all communities. It does not discriminate between the rich and the poor. It is a unifying event. It is a city event. We are very fortunate to be the sponsors of the event because its ownership is clearly with the city. It is not that the event becomes too big because we own it. We leverage it in the sense of that one of our strong streams of brand propositions is to do with community and participating with the community. We feel the marathon is the right platform to showcase that we use this platform to raise money for the underprivileged. If you look at the advertising around the Mumbai Marathon in the last two years, it has nothing to do with our product or what Standard Chartered does in the country. We haven't used it as a commercial platform.
What is the way forward for you?
Fundamentally, we are very confident yet cautious about the Indian economy. The financial services in India, by global standards, are under-penetrated. So according to any indicator—be it a percentage of GDP, percentage of population, percentage of income or you see the houses that are financed, cars which are financed—if you look at it by global standards, everything is under-penetrated. So we have a long way to go, for the industry to grow.
So how are we placed within these given parameters? What are the key ingredients required to grow and capture the opportunities? The key ingredients are capital, people and technology, which are the fundamental blocks. And then you have leadership and management. We believe we have all these ingredients. We have adequate focus and support from the group's board in London on leadership and management.