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Barclay's Indian Retail Head Quits
Monday, May 11, 2009

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.



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