Twitter
Advertisement

Banks put overseas expansions on hold

SBI moving entire back-office ops to India to reduce costs; Bank of India, others cutting on travel costs and slashing manpower in the foreign office

Latest News
article-main
Representational Image
FacebookTwitterWhatsappLinkedin

State Bank of India, the country's largest lender, is shifting entire back-office operations of its 169 foreign offices to Kolkata. Out of the 23 back offices, five have been already relocated to Kolkata and remaining will be relocated by March 2015. The move follows SBI's decision to rationalise operating cost under strict instructions from the finance ministry.

The bank has also not opened any new branches or representative office in the last one year to keep its operating expenses down. SBI's 169 foreign offices are spread across 35 countries. Arundhati Bhattacharya, chairman of SBI, told dna, "We are onshoring our back-office operations so that operating costs are kept under control." This would help SBI's overseas branches save operational expenses and reduce employee strength. At present, each back office has up to four employees.

In 2011, the bank was looking at acquiring banks in Africa and Southeast Asia to ramp up its overseas operations and had plans of spending about $200 million in overseas acquisitions. But the lender has not moved on those fronts as it focuses on improving cost efficiencies and quality of assets.

SBI is not alone in curtailing growth in its overseas branches. Other public sector banks such as Bank of India (BoI) and Bank of Baroda (BoB) are also going slow in foreign branch expansions. Except for a branch in Dubai, BoI has not nudged to grow, while it is cutting down expenses, travel costs and slashing manpower in the foreign office.

Vijayalakshmi Iyer, chairman and managing director, Bank of India, told dna, "We have about 56 foreign offices, where the overall strength has come down by 20%. The number of days people stay at foreign locations are down by 50%, and the number of people accompanying the auditor has also been cut down by 40%."

Bank of Baroda is another lender with a large network of offices overseas to have not opened a single new foreign office this financial year. At least till two years back, BoB was expanding its footprint by opening at least 6 to 12 branches. BoB has significant international presence with a network of 104 branches or offices in 24 countries, including 60 branches or offices of the bank, and 43 branches of its subsidiaries, and one representative office in Thailand.

ICICI Bank, the largest private sector lender, is also curtailing the growth in its overseas branches and repatriating excess capital from those branches to India as when the overseas subsidiaries have excess capital over and above the regulatory requirement, to fund its domestic balance sheet. The bank is planning to sell its Russian subsidiary, ICICI Bank Eurasia, to Sovconbank. The transaction is expected to conclude by end of this financial year, the bank said in a stock exchange filing on Friday.

In a conference call post third-quarter results, the bank management said last month that, "ICICI Bank Canada has made an application to the Office of Superintendent of Financial Institutions (OSFI), seeking approval for second round of capital repatriation."

 

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement