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Deutsche Bank to open 100% non-banking finance firm
By siliconindia
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Tuesday, 17 August 2004, 19:30 IST
MUMBAI: Deutsche Bank is looking at opening a 100% non-banking finance company in India. The bank has recently applied to the foreign investment promotion board (FIPB). The move is surprising since the German bank neither runs retail operations in the country, nor is it a big player in the direct corporate loan market.
The new company, Deutsche India Holdings, Mumbai, will be the holding and investment company for various existing and future operating subsidiaries of the bank in India, particularly companies in financial services and information technology sectors. The promoters of the company will be Deutsche Asia Pacific Holdings (DAPH) and the investment holding company of Deutsche Bank, Germany.
Deutsche Bank CEO Gunit Chadha confirmed the move.
We are only creating an enabling provision for business expansion in India, he said. However, he refused to comment on whether the NBFC would be used for retail activities.
In December 00, the bank had exited the retail banking business by transferring its retail deposit liabilities in India to HSBC. The bank had around Rs 50 crore deposits. DB has retail operations in Germany, Italy and Spain.
Banks normally open a 100% NBFC for retail, corporate lending or for primary dealership. However, DB is better known in the structured products market, helping corporates raise money from the debt and capital market, rather than taking pure lending exposures. However, NBFCs, unlike banks, do not have constraints on exposures to a single company or business group. The bank also has a PD arm in the country.
Mr Chadha said the bank will look at increasing the loan side if there is clear customer need. We will look at alternatives if the corporates need financing, he said. DB will make an upfront investment of $7.5m after getting government approval, while the balance will be bought in within 24 months of the approval.
Other than the bank, the DB group has four subsidiaries in the country Deutsche Securities, Deutsche Equities, Deutsche Asset Management (India) and Deutsche Trustee Services. DAPH holds a 75% stake in the first two companies, while Deutsche Asset Management (Asia), which is a wholly-owned subsidiary of DAPH, holds a 75% stake in the asset management business. Deutsche Securities is the primary dealer division of DB, while Deutsche Equities undertakes the merchant banking and underwriting business.