'Exploit opportunities made by subprime crisis'

BANKER'S SPEAK: Sandeep Sharma

Societe Generale, one of the leading financial services companies in Europe, is bullish on India in the private banking space. SoGen hopes to cash in on the growing wealth among the Indian upper middle class by offering a range of wealth management products. Sandeep Sharma, the head of private banking, India of SG Private Banking India, speaks about its plans in an interview with Rajesh Abraham.

What are SG Private Banking India's future plans?

SG Private Banking India launched its operations for onshore wealth management business in India on December 1, 2005. We provide clients with a broad range of financial products and services, while ensuring that they benefit from the advantages of the key financial marketplaces.

We already have a 50-strong team across offices in New Delhi, Mumbai and Bangalore. We have fared well in our first quarter and if we move at this pace, by the end of the year, we will be among the top few players in India.

The rapid growth pattern reflects Societe Generale's global development of private banking, in which Asia-Pacific plays a key role.

Our future plans, include beefing up the team with some more relationship managers to help us meet the growing demand of our increasing clientele. Also, we have developed a focused go-to-market strategy with emphasis on branding and micro marketing initiatives.

Besides, we are keeping a constant watch on the markets and we plan to develop innovative structured products along with third parties keeping the risk profile of the client and current market conditions in mind.

Where is the private banking industry headed globally and more specifically in India?

The private banking Industry is expected to grow globally. The factors that, we believe, will push growth are - the increase in the number of high net worth individuals (HNWIs) as well as the total HNWI wealth and newer and more complex forms of investments being considered.

Secondary research reveals that globally, the HNWIs grew by 8.3 per cent in 2006, to a total of 9.5 million individuals. The total HNWI wealth in 2006 grew by 11.4 per cent over the previous year, to $37.2 trillion in financial assets.

The HNWI financial wealth is expected to reach $51.6 trillion by 2011, growing at an annual rate of 6.8 per cent.

Breaking away from the traditional asset classes of equity, debt, real estate and gold, alternative forms of investment, including private equity, investments of passion (fine art and collectables), structured products, hedge funds and managed funds are increasingly being explored.

On private banking in India, the country is among the fastest growing economies in the world and is becoming an increasingly attractive market for many industries "� private banking is no exception.

Driving the country's development has been its exceptional economic performance over the last decade. The booming economy has precipitated into innumerable opportunities and pushed individual wealth growth.

Moreover, the Indian financial services industry has undergone a sea change "� an investor can choose from an assortment of sophisticated products. In view of the increasing complexity and volatility, the financial markets require constant monitoring.

This coupled with swelling incomes and a lack of time to manage one's portfolio has created a segment of high net worth individuals and sophisticated investors who have begun appreciating the need for private banking.

What is your view on the Indian markets? Do you see more volatility in markets such as India from the subprime crisis in the US?

The subprime crisis will generate pockets of opportunities and weaknesses in the international markets. These should be exploited but through active management of the portfolio. We would prefer to invest in growth stocks.

Which are the sectors that look attractive for investment in India? Do you think the markets are overvalued at the moment?

Telecom and capital goods are the sectors that look attractive. These two sectors have a very high earnings visibility going forward.

What is your view on interest rates?

The future interest rate movement is largely dependant on inflation as base effect starts to wane in the last quarter of the calendar year. We expect interest rates to firm up marginally towards the end of the year.