ANZ poised to launch into fast-growing Indian market

ANZ appears to have all but secured its long-awaited Indian banking licence after the nation's reserve bank recommended to the Indian government that it be allowed to open a branch in Mumbai.

By InvestSMART · 16 Feb 2010

By InvestSMART ·
16 Feb 2010

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ANZ appears to have all but secured its long-awaited Indian banking licence after the nation's reserve bank recommended to the Indian government that it be allowed to open a branch in Mumbai.

The licence would open a new front to the ambitious Asian expansion headed by the ANZ chief executive, Mike Smith. The bank has been waiting more than a year for approval to enter the fast-growing Indian market.

An unnamed official with India's Ministry of Finance was quoted by India's Economic Times as saying the Reserve Bank of India had given its approval to the ANZ application for a banking licence. The final decision on the matter now sits with India's Finance Minister.

Several Indian government departments, including the Ministry of External Affairs, the Ministry of Home Affairs and the Department of Commerce, had already given their blessing for ANZ to open a Mumbai branch, the report said.

Last year, ANZ took part in talks regarding the 30 Royal Bank of Scotland branches in India but the branches were sold to HSBC.

ANZ has a mixed history in the Indian market through its previous ownership of Grindlays, which it sold to Standard Chartered in 2000. Grindlays later became involved in a long-running legal action after being caught up in a fraudulent cheque scam. ANZ was eventually hit with more than $280 million in losses as a result of the action.

ANZ owns a technology services business in Bangalore, which provides back office support for the bank's Australian and New Zealand operations. In India, like other parts of Asia, ANZ is hoping to sell retail banking services to the nation's booming middle class.

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Frequently Asked Questions about this Article…

What is the latest on ANZ’s application for an Indian banking licence and a Mumbai branch?

According to reports, India’s Reserve Bank has recommended that the government allow ANZ to open a branch in Mumbai. That recommendation now goes to India’s Finance Minister for a final decision, and several Indian departments had already signalled approval.

Why would an ANZ banking licence in India matter to everyday investors?

A licence would give ANZ access to India’s fast-growing retail market, letting the bank sell services to the expanding middle class. For investors, that could mean new revenue growth opportunities if ANZ successfully expands its Asian business.

How long has ANZ been waiting for approval to enter the Indian market?

The article says ANZ has been waiting more than a year for approval to enter India, so this recommendation from the Reserve Bank is an important step toward a decision.

What support has ANZ already secured from Indian government departments?

Reports say several departments — including the Ministry of External Affairs, the Ministry of Home Affairs and the Department of Commerce — had already given their blessing for ANZ to open a Mumbai branch.

Does ANZ already have operations in India?

Yes. ANZ owns a technology services business in Bangalore that provides back-office support for its Australian and New Zealand operations. The bank also plans to target retail banking customers in India.

Has ANZ operated in India before and does it have any past issues investors should know about?

ANZ formerly owned Grindlays, which it sold to Standard Chartered in 2000. Grindlays later became involved in a fraudulent cheque scandal that ultimately led ANZ to suffer more than $280 million in losses related to that action.

What happened with the Royal Bank of Scotland (RBS) branches in India and ANZ’s role?

Last year ANZ took part in talks about 30 RBS branches in India, but those branches were ultimately sold to HSBC rather than to ANZ.

Who is leading ANZ’s push into Asia and how does India fit into that strategy?

ANZ’s Asian expansion is being led by chief executive Mike Smith. Gaining an Indian banking licence would open a new front in that strategy by giving the bank direct access to India’s fast-growing market.