ANZ has received permission from the Reserve Bank of India (RBI) to establish a foreign bank branch in India. It will be the Australian bank's first branch in India and will be located in Mumbai.
"Our aspiration in the longer term in India is to build a full franchise across the retail, wealth, institutional and commercial segments to become a top four foreign bank," Alex Thursby, ANZ's chief executive officer, said in an internal memo. In the short-term, ANZ intends to use the licence to offer its institutional clients in India a full suite of products.
The branch will mark the return of the ANZ group to India after a decade's absence. ANZ used to be well-entrenched in India through the Grindlays brand. Established in 1828, Grindlays was a major British overseas bank which operated mainly in the British colonies, including India. In 1984 ANZ acquired a controlling interest in the bank, and subsequently changed its name to ANZ Grindlays. For a period ANZ Grindlays was the largest foreign bank operating in India.
In the early 1990s ANZ Grindlays got embroiled in a dispute with the RBI surrounding cheque payments in India. In the aftermath, it sold the Grindlays subsidiary worldwide to Standard Chartered in 2000. Standard Chartered merged Grindlays with its existing operations and became the largest foreign bank in India, Pakistan and Bangladesh.
"Re-establishing a branch presence in India is a strategic priority for ANZ as part of its objective to become a super-regional bank focussed on Australia, New Zealand and Asia-Pacific," said ANZ in a written statement announcing the Mumbai branch approval.
In line with the super-regional bank strategy ANZ bought select Royal Bank of Scotland assets in Hong Kong, Indonesia, Singapore, Taiwan and Vietnam in August 2009. Specialists have referred to the acquisition as a game-changer for ANZ with respect to its Asia-Pacific presence. RBS also had on the block some India and China assets, but ANZ chose to pursue a deal without these.
Some specialists feel ANZ did not pursue the India assets as it was not confident that it would be able to secure relevant RBI approvals for the deal, given its past history in India. The RBS India assets were subsequently shopped to Standard Chartered, but RBS and Standard Chartered could not reach an agreement on the commercial terms.
Currently, HSBC is in an advanced stage of discussions to buy some of the RBS India assets. HSBC has solicited the views of the RBI on a potential takeover and is now to revert to RBS on details of a final deal, sources say.