Fortis plans broking foray

European banking and insurance major Fortis is planning to foray into wealth management and equity broking business in India to tap the growing rich and super rich individuals of one of the fastest growing economies in the world.

The move to enter the country comes after the Netherlands-headquartered company recently lost out in the race to acquire a significant equity stake in a domestic brokerage house, sources said.

Fortis' operations is divided into six businesses - three in banking (retail, merchant and commercial banking & private banking) and three insurance businesses (Insurance Belgium, Insurance Netherlands and Insurance International). With a market capitalisation of ¤ 39 billion, Fortis ranks among the twenty largest financial institutions in Europe.

When contacted a Fortis Bank representative declined to comment on its plans for wealth management business in India. Last year, Fortis Insurance International entered into a joint venture with Industrial Development Bank of India (IDBI) and Federal Bank to form a life insurance company here.

IDBI has 48 per cent ownership in the joint venture while Federal Bank and Fortis hold 26 per cent each, which is the maximum allowable shareholding for foreign insurers under FDI regulations.

International financial services major Citigroup, Standard Chartered, France's Societe Generale and Kuwait -based Global Investment House have plans to enter the booming retail broking space.

Some of the recent entrants in the domestic brokerage business include BNP Paribas, which acquired a 33 per cent stake in Geojit Financial Services, E*Trade, the fourth largest online broking firm in the US which acquired majority control in IL&FS Investsmart, and BankMuscat, which bought 43 per cent in Mangal Keshav Group.

As per a Morgan Stanley research, the trading volume in the Indian markets is expected to double to $ 3.2 trillion in 2010 from about $ 1.6 trillion currently. Morgan Stanley projects the Indian brokerage business to grow to $ 3.9 billion by 2015.

International banks, including Duetsche Bank, ABN Amro and UBS, have also announced their foray in the securities business in India. The keen interest shown by foreign financial institutions follows the massive potential for retail broking business in India.