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JPMorgan targets new branches in India for wholesale banking

Tuesday, October 27, 2015 - 10:43
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JPMorgan Chase & Co, the largest US bank, is seeking branch licenses in India to bolster its wholesale banking operations in the country.

[HONG KONG] JPMorgan Chase & Co, the largest US bank, is seeking branch licenses in India to bolster its wholesale banking operations in the country.

The bank is in talks with the Reserve Bank of India over permits for centers to support corporate client services including cash management, foreign-currency payments and trade finance, said Muhammad Aurangzeb, Asia Pacific chief executive officer of JPMorgan's global corporate bank unit. He's aiming to open the new outlets next year, to add to the firm's sole wholesale branch, which it opened in Mumbai in 1994.

"We're servicing our clients out of India from Mumbai, but we're looking at other centers where our target-market clients are in those centers," Mr Aurangzeb said in an interview in Hong Kong on Thursday. "We're following our clients' priorities and India is still coming up in a big way."

JPMorgan provides wholesale banking services to government- related institutions in New Delhi, and multinational companies that are investing in Bangalore and Chennai, Aurangzeb said. He declined to say where JPMorgan wants to open its new centers, noting that their locations will be determined by the RBI, which is seeking to improve access to financial services for people living outside the country's major cities.

Over the past two years, the central bank approved Standard Chartered Plc to open outlets in the central city of Chhindwara and in Nakatia in the north. The London-based lender is the largest foreign bank in India by branches, with 100 operational outlets. HSBC Holdings Plc has 50, while Citigroup Inc. has 45.

Central Bank For wholesale banking, JPMorgan is targeting clients including large domestic companies, multinationals, financial firms and government-backed institutions that are active in cross-border transactions, Mr Aurangzeb said.

"It's very much for either Asian, European, US clients who want to do business in India or increasing the outbound agenda from India," said the banker, who's based in Singapore.

JPMorgan will have to conform with an RBI rule requiring foreign banks with fewer than 20 branches to extend 32 per cent of their on-shore lending to the so-called priority sector, which includes farmers and smaller businesses. That amount will be increased to 40 per cent by 2020.

JPMorgan's presence in India dates to 1922, when JP Morgan & Co and its London affiliate Morgan Grenfell took a stake in Andrew Yule & Co, a merchant bank in Calcutta, a city in the country's east that is now known as Kolkata.

Mr Aurangzeb's business is part of JPMorgan's corporate and investment bank division, which reported earlier this month a 10 per cent drop in third-quarter revenue from a year earlier. He declined to disclose figures for the corporate bank in Asia.

The firm has more than 100 corporate bankers in Asia after adding 10 to 12 this year, said Mr Aurangzeb, adding he hopes to hire more people in India, China and Southeast Asia next year. Among those markets, China has logged "high double-digit" revenue growth in the past three to four years, Mr Aurangzeb said, which is a pace that he expects to maintain.

The banker said his unit's clients remain positive with "aggressive agendas" over the next three to five years, even as growth in Asia slows. India's gross domestic product expanded 7 per cent in the three months to June from a year earlier, less than the previous quarter's 7.5 per cent, government data show.

"Notwithstanding a little bit of slowdown, on a relative basis the region is still growing faster than any other region," Mr Aurangzeb said. "I think the upside for us will remain" as long as clients want to execute their plans, he said.

BLOOMBERG