Bank of America, which recently shut a part of its investment banking unit in India and sold its retail business as a part of global strategy, is ready to reposition itself in India.
Explaining the rationale, Colm McCarthy, president-Asia, BankAm, says, "We don't believe in balance-sheet size. For us, the viability of a business depends on returns."
The bank, which recently opened a branch in Bangalore (it fifth, and set up after a gap of two decades) is looking at fresh investments. It is in the process of pumping in $50 million into its proposed 100 per cent non-banking finance subsidiary for which it has already received the Foreign Investment Promotion Board approval.
"India is among the top three or four countries in BankAm's Asian business and a very important franchise on the global scale. Around 17 per cent of the Asian balance sheet is contributed to by India," says McCarthy.
Admitting that BankAm was lacking focus, the Asian chief says : "We have been looking at this issue over the last one year. We are getting back the focus on value-added areas. India is at the top of our agenda as it offers a very strong mix of working capital and structured debt. It's a well-rounded franchise."
The bank has chalked out a three-pronged strategy for India. It will focus on working capital financing (including LCs, forex loans), global markets (swaps and derivatives) and debt capital raising (syndicated loans, structured project financing, equity and credit derivatives). The proposed non-banking finance company will focus on primary dealership, debt distribution among others.
The bank is also setting up a commodity trading desk in Singapore which will start off with oil and gas. We will offer this also to the Indian clients," says McCarthy.
"Our growth targets are measured in cross-selling and overall returns. Our risk exposure has increased much faster in the last three years. We expect the risk profile to grow and but not the balance-sheet size. We still want to lend and are willing to lend. We are growing in most of our product suites," points out McCarthy.
Another focus area is private equity. It plans to invest around $50 million in private equities over the next few years.
"The bank is looking at increasing its exposure of private equity fund by $50 million in the next two years. The existing investments are around the same level. The slowdown is a good entry point," says Bank of America's managing director and country manager (India), Vishwavir Ahuja.
