Samir Bhatia, head of Barclays retail and commercial business in India,
and the man who built the bank's retail business from scratch, put in
his papers on Thursday. The move puts to rest market speculation that
Mr Bhatia was on his way out of Barclays. Barclays has confirmed the
resignation of Mr Bhatia. "Samir has made a great contribution
to the establishment of Barclays GRCB (Global Retail & Commercial
Banking unit) in India, and has successfully led Barclays' operations
across the whole India & Indian Ocean region," a bank spokesperson
said. He added that Ram Gopal, chief operating officer for GRCB India,
will act as the interim MD and report to Mark Jones, managing director
- Asia, GRCB Emerging Markets. Although Mr Bhatia refused to comment
on the reasons for his quitting or his future plans, banking officials
in the know said he was likely to start his own business, in all probability,
a non-finance venture.
Barclays entered into India's retail banking space a couple of years
ago with a big bang. In India, the bank runs the investment banking
business under Barclays Capital and the GRCB business. However, over
the past few months, the bank has slowed down customer acquisitions
on the back of market conditions. "On the personal loans and credit
cards front, the drop in numbers is in keeping with the overall market
sentiment and current industry trends," the spokesperson said.
The bank is looking at purchasing both personal loan and mortgage portfolios
from other lenders. Incidentally, Barclays is the only bank that is
considering a portfolio buyout. Barclays has invested around Rs 6,000
crore in India, of which £240 million (Rs 1,800 crore) has been
invested in the retail and commercial business and the remaining in
investment banking. Incidentally, both Barclays and Deutsche Bank, which
ventured into retail banking in the country in recent years, have witnessed
a change at the top. In case of Deutsche Bank, Ajay Bhimbhet quit the
German bank to join Royal Sundaram. Barclays also runs an NBFC in the
country - Barclays Finance - which has 119 branches across 49 locations
in India.
In a recent statement affirming Barclay's rating, Fitch said that it
expects Barclay's net interest margin to shrink because of the reducing
share of high-yielding retail loans in the portfolio and low yields
on short-term corporate loans. "Opportunities in the domestic debt
and derivatives market are also diminishing and therefore fees (from
Barclays Capital), the investment banking division), and treasury income
growth is likely to suffer," the rating agency said. Fitch expects
delinquencies to increase, including in the corporate portfolio because
the sector, in general, is experiencing strain on cash flows due to
slowing demand. "Delinquencies may also increase in its credit
exposures arising from derivative contracts with corporates. Therefore,
with topline under pressure and credit costs on the rise, profitability
is expected to weaken significantly in the near term" the statement
added.
