Satvinder Singh leads Deutsche Bank’s trust and securities services and cash management for financial institutions globally. In an interview with Somasroy Chakraborty, he discusses the growing importance of transaction banking globally in the current uncertain macroeconomic environment. Edited excerpts:
Is the business of transaction banking gaining more importance in the current uncertain macroeconomic environment?
It has increasingly come into focus after the crisis in 2008. Organisations have realised the importance of this business, given its stable fee-based annuity income. Most of the businesses in transaction banking are not capital-intensive.
Some of the transaction banking products are not capital-intensive, which makes this business more relevant in the current environment. Even non-traditional transaction banks are saying it’s a good idea to set up this business.
What is Deutsche Bank’s strategy for its transaction banking business?
It has always been a core part of our overall business. It reported revenues of euro 3.6 billion in 2011. Our structure has been aligned to ensure maximum internal synergies while maintaining client focus. Clients are looking for solutions rather than products, and our focus is to provide these solutions across the bank.
How significant is the cash management, trust and securities services business for Deutsche Bank in India?
The India business for trust and securities services and cash management is the third-largest in our network, after Germany and the US. Within India, we are a large contributor to the Deutsche Bank franchise.
For example, we are the largest provider of custody, with assets worth of euro 100 billion, and the largest in terms of euro clearing and depository receipts business. We are building our corporate trust business, as the market develops for this product in India. Our global networks enable us to share the best practices within the markets we operate in. Clearly, given the success of our business in India, it has been an exporter of best practices and talent for our global business.
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What are your plans for the transaction banking business in India going forward?
2012 has started well for the business. We are seeing an increase in client activity and we expect the momentum to continue. I’m confident we have the right business model, focused strategy, right mix of clients and experts across all key products. We will continue to actively focus on India and this will enable our growth strategy to continue.
Do you see Indian banks emerging as strong players in this space?
Foreign banks continue to be key players in this business. The very nature of some of the services we offer require a global presence, which banks like us are better equipped to offer. For example, foreign institutional investors (FIIs) prefer a multi-market service provider for better synergies, standardised products and services, reduced touch points and ability to leverage global presence.
FII flows to India in 2012 have been strong. Do you expect this trend to continue?
I believe the India story is here to stay. Fund managers remain bullish on India, though some of the challenges of investing here continue. But these challenges are not dissimilar to other large emerging markets. Foreign investors will continue to invest, as long as they find their Indian investments are offering them good returns, relative to other markets. New initiatives like qualified foreign investments, still in its nascent stage, will definitely help to increase flows to India.