JP Morgan sees India as key market

Partnering with banks, a model JP Morgan has adopted in most of the Asia Pacific region, has been a big success for the wholesale investment banking arm of JP Morgan Chase.

For want of a sound partner, JP Morgan has, however, not tied up with any bank in India. Nevertheless, its Indian business has performed well.

The investment bank boasts of managing over $8 billion of foreign institutional assets in India, and 15 per cent of domestic funds under various mutual fund schemes.

"As a global custodian, we need to take a call as to whether we will compete or work together with domestic banks," Laurence Bailey, senior vice-president, JP Morgan, said. "We did not find any local partner we felt comfortable with in India," he added.

While emerging markets such as India and China contribute negligibly to the total global revenue, JP Morgan sees immense growth in these markets.

"Our strategic focus is on big revenue regions such as Australia and Japan, but growth opportunities are in China and India," Bailey said.

Australia accounts for 60 per cent of the total revenue for the global investment banker, with another 20-30 per cent coming from Japan. The balance comes from emerging markets including India and China.

In countries such as Japan and China, JP Morgan has tied up with strong domestic banks for the custodian business. This has ensured JP Morgan a leading market share of 50 per cent in Japanese outbound business with just 25 people on the ground.

Similarly, with its tie up with a Chinese bank having 25,000 branches, JP Morgan is looking after $ 60 billion assets.

"For the mutual fund business, distribution is important. In China, our tie up with the bank having 25,000 branches makes a good distribution chain," said Bailey.

In India, JP Morgan has seen double digit growth in the FII custodian business. Similarly, its entry in the mutual fund industry 18 months back has earned it a 15 per cent market share.

However, contrary to its global competitors "" Bank of New York and Citibank "" which focuses on many clients, "we have just a handful of clients. We do not see much of a rise in absolute number of clients, but these being leaders and consolidation expected in the industry, there could be an increase in terms of assets under management," said Bailey.

Meanwhile, JP Morgan hopes to play a role in cross-border investment when offshore investments are permitted as it eyes the opening up of the Indian pension industry, and the growing insurance market.