Indian Fin Sector Less Lucrative Than China, Singapore: PwC
Wednesday, 28 September 2011, 19:16 IST
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Bangalore ; Regulatory uncertainties are making the country's financial services sector less lucrative compared to neighbouring China's and Singapore's, says a survey by international accounting major PwC. However, the survey said the M&A activity in the Indian financial services sector is expected to pick up as regulatory barriers fall. According to the survey 'Financial Services M&A in Asia 2011', despite the huge growth potential, the country is identified as a potential destination by only 16 percent of the respondents. "Overall, there is strong potential for higher levels of M&A in Indian financial services but this is partly offset by regulatory uncertainty. Regulatory changes and the wait for new banking and insurance guidelines are creating uncertainty over target valuations, which can be a barrier to getting deals done," the survey noted. The survey was conducted during May-June 2011 among 375 senior executives in financial services across 13 Asian countries, such as India, Australia, China, Hong Kong, Indonesia, Japan, Malaysia, Philippines Singapore, South Korea, Taiwan, Thailand and Vietnam. Among India's competitors, China was cited as the most attractive area for geographic expansion via M&A by 37 percent of the 375 senior executives surveyed by PwC, followed by Singapore (23 percent ), Hong Kong (21 percent ), Malaysia (19 percent ) and, Thailand and Japan at 17 percent each. Overall, the survey said there will be high levels of M&A in Asia for the rest of this year and in 2012. It said that in 2011 investment management, capital markets and investment banking have been the leading business lines for M&A in India, indicating an increased highlight on capital markets. Similarly, investment banking followed by investment management and capital markets were the primary business lines for M&A in Asia. Prior years have seen a greater emphasis on retail, corporate and private banking. Growing demand from the middle class in the country, higher saving rates and lower financial penetration levels across the population will be the key drivers for attracting high levels of M&A in India. "Indian financial services markets have grown rapidly in recent years, and have huge further potential. This reflects a variety of factors including annual savings rates of more than 30 percent favourable demographic trends and growing demand from India's 250 million-strong middle class," PwC said. Besides, the survey said that over 50 percent of Asian respondents expected they will be involved in a deal over the next 12 months.
Source: PTI
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