Dresdner was operating only a representative office in India. IndiaÆs central bank, the Reserve Bank of India, has now given it permission to open a fully fledged branch in Mumbai.
"India is a booming market with enormous customer potential,ö says Herbert Walter, chairman of the board of managing directors of Dresdner Bank in a written statement. ôThat's why it is essential for us to expand our presence in this region"
Like most other banks, Dresdner has plans to build its private client business in India. The branch will enable it to offer customers a range of financial services - from bank accounts to mortgages, and from deposits to consumer loans.
Even for domestic banks a key driver of M&A deals has been the existing branch network of the target. But for foreign banks getting branch licenses in IndiaÆs controlled banking sector is a lengthy process and a number of foreign banks have been waiting for years.
RBS, for example, was awaiting a branch license for India and had not yet established a representative office on the ground when it was part of a consortium that acquired ABN AMRO.
RBS now controls ABNÆs 28 branches in 21 Indian cities and three licenses which are yet to be converted to branches. RBS is now one of the top five foreign-owned banking players in India. It has also acquired ABNÆs private banking business in the country. RBS senior management has commented that in India the ABN business has given it a 10 to 15 year lead time advantage vis-a-vis establishing on its own.
Foreign banks are eagerly awaiting 2009 when India has committed to the World Trade Organisation that it will lift restrictions for foreign players in the banking sector. But some industry players are sceptical that this will happen and expect India to seek a further extension. ôIndia has made little progress with public sector banks and is definitely not going to adhere to this timeframe,ö says the country head of a leading foreign bank based in India. The banks which will be immediately impacted by free, unregulated competition in the banking sector are the state-owned banks, which are not all operating efficiently enough to be able to compete.
Dresdner's parent company, Allianz, is already represented in India through joint ventures, Bajaj Allianz Life and Bajaj Allianz General Insurance. Allianz has around 300,000 representatives in India.
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