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Barclays, the global lender, appointed John Winter its chief executive officer, corporate banking, in January 2010. Both a British and American citizen, he speaks to Reghu Balakrishnan on the operations and views on the India market. Edited excerpts:
What changes are you putting in place?
In the most recent quarter, January to March, we recorded a profit before tax of £180 million. If you are referring to last year, we took a provision for what's called interest rate hedging products. So, if you adjust for this provision, we continue to run a profitable corporate banking business.
What is the break-up of your revenue on a geographic basis?
If you look at where our revenues are booked, like most of the business that we do with Indian clients, we do in the UK. Some companies are headquartered in India but they have enormously large offices in the UK. So, where the revenues are booked isn't necessarily where the client is.
That said, if you look at where the revenues are booked, about 75 per cent are in the UK. Of the revenue booked outside the UK, 30-40 per cent is from the Middle East and India.
In a recent investor meet, you had said it was tough to do retail business in India.
We remain very optimistic about India. What I was specifically referring to is the retail business in India for us. We now have six branches and we have de-emphasised the retail aspect of our business. We’re saying it is very difficult to build a competitive retail banking business in India with such a small network. It’s the same thing in the UAE.
We have a small footprint — one branch in Dubai, one in Abu Dhabi. What I am optimistic about is doing business with institutions, corporates, with banks and with larger clients. I think there is a lot of opportunity, both in India and in the Middle East, the UAE in particular. Africa is different; there, we are among the top three banks in most of the 13 countries we operate in.
How did you reduce presence in the retail business?
Retail means individuals; you and I are all retail clients. That business outside of the African countries I mentioned and outside the UK is very challenging for Barclays. Most banks find retail business to be challenging outside of their domestic market. You look around the world and a lot of banks are exiting retail operations in a number of countries and refocusing their efforts. In the past three years, we sold the bank we had in Russia, we exited the one we had in Indonesia. We have reduced a number of other retail presence here in India. We have scaled back the footprint we had in the Middle East. And, we scaled back in Europe as well. So, that's for the retail scaling back focus on individuals.
As you are optimistic about the Indian market, how can you build your corporate banking presence?
We find companies need a global bank. If you think of yourself as an individual, you probably don't need a bank that can provide you with services in 65 countries. Companies are different; they export goods and services around the world. They have currency inflows coming in. They have all sorts of banking needs all over the place. India has some of the largest and most successful companies in the world, in different sectors. Being a bank to those clients, to those companies, they develop their operations, whether it's in UK or Africa.
The billionaire list in China and India is growing fast. How can you link the opportunity with corporate banking?
When we are talking about billionaires and their personal wealth, we’re looking at a different segment.
These are not people who will walk into our branches. Those clients are covered by our private bank, our wealth and investment management business, and there we do see opportunities. Interestingly enough, a lot of those clients have a combination of needs.
They have businesses, they have personal wealth and often what they want from Barclays is access to our corporate banking services, which will provide them with money to finance, say, their hotel expansion or acquisition plans. So, we have a good focus on these ultra high net worth individuals. We do a lot of work with them.
Are you concerned about the Reserve Bank of India’s demand on setting up subsidiaries for all foreign banks operating in the country?
It’s an interesting topic. What we are seeing is that it’s not just in India but in many other countries as well, the desire on the part of the local regulator to have more control over the local business. So, subsidiaries are preferred to branches. The challenge we face is that if every regulator around the world says we want a subsidiary, we will have to over-capitalise the bank, which is an inefficient way to run the business. So, I don't have a particular concern around the Reserve Bank of India’s push for subsidiarisation because India’s position on this issue is not unique.
How do you connect your I-banking experience to expand corporate banking?
Whether it’s something as simple as making a loan or cash management services or merger and acquisition advice and even everything else in between, we want to be able to provide that service to our clients. If you are an Indian company, we can bank you in the Middle East, in Dubai, we can bank you in London, in Paris or Africa. That's what most clients in India want. They want access to that global aspect of Barclays.
So, to answer your question, a lot of the growth we see is robust, particularly in the countries where there is strong economic growth, India being one of these. Even in Europe where we do think we are likely to see potentially negative GDP growth this year across the region, it's likely that we will still see improvement in our corporate banking business. I hate to use this analogy but part of what you can think of it is like electricity. We sit here, lights work and everything is fine. If it stopped working, it's the only thing that we are going to start talking about. It's like that with banking. If you are out there and the cash machines don't work, if the payments don't work, suddenly it's the most important thing. So, providing that basic reliable service is what allows companies to operate their businesses. We are correlated to some extent with economic growth but not entirely because whether the economy is rolling or not, you still need your basic banking services.
