'It is not looking at valuation, but investment, growth and ultimately better profit for stakeholders.'
UAE-based Emirates NBD PJSC has entered into an agreement with Mumbai-based RBL Bank to invest Rs 26,850 crore (around $3 billion) for a stake of up to 60 per cent, marking the largest cross-border investment in an Indian private bank.
RBL Bank's Managing Director & Chief Executive Officer R Subramaniakumar spoke to Subrata Panda/Business Standard in an interview in Mumbai.
How are you looking to use the funds that will come into the bank for growth?
Currently, we are focusing on getting the transaction completed. But, we have a broad plan to guide our next steps.
Our focus will be on developing more profitable products, expanding our credit card portfolio with personalised offerings, and enhancing distribution by increasing our branch network from 569 to around 1,000-1,200 branches over time.
This will help mobilise more deposits. Additionally, the capabilities of our existing corporate and commercial banking verticals will be strengthened.
Our aim is to increase our market share from the current 0.5 per cent to around 1 per cent.
There are new areas we can foray into, including cross-border transactions, trade finance, wealth management, and digital payments business along the West Asia-India corridor as a result of the investment.
Will there be a change in management, following merger with Emirates NBD India branches and it coming along as a promoter?
I don't believe it will materially impact anything, as the number of people in their branches is quite small.
So, you will lead the bank for the foreseeable future?
My term has been renewed by the Reserve Bank of India (RBI), which reflects the confidence it has in me.
I believe the board shares this confidence as well. My focus remains on the 31,000 employees at the bank, ensuring their productivity, efficiency, and overall contribution.
Since RBL will be Emirates NBD's listed subsidiary in India, so its stake cannot go below 51 per cent?
It is a long-term investor. It has made it clear that it would come in for at least 15-20 years.
It is not looking at valuation, but investment, growth and ultimately better profit for stakeholders.
Will you now look to get into other financial services businesses, such as insurance and asset management, among others?
Right now, these things are there in the corner of our mind. Naturally, when our ambition is to be in the league of large banks, we would look at the other areas in financial services.
We do have an ambition to become a financial conglomerate. But right now, we are not focused on that.
What made you go with Emirates NBD?
Our intention was to raise substantial capital for the bank's long-term growth. While evaluating opportunities, we considered whether to raise it in tranches or in a single go.
And overall, we found the latter to be a viable option.
Was there a soft signal from the regulator, or the government that they are comfortable with this deal?
We approached this by consulting people who are familiar with regulatory processes.
In fact, the chairman of our board was part of RBI earlier, giving him a solid understanding of how things work.
As a result, we received extensive feedback. We had a feeling that, although it is difficult to do, it might work out.
How much will Emirates NBD eventually hold in the bank?
We think that it will be up to 60 per cent, and following the merger of the branches, some additional shares will be allotted to it.
How long do you think it will take to get regulatory approvals for the transaction?
We can't give a specific timeline because it is in the domain of the regulators and the government. But we feel all the approvals should be in place within 6-8 months.
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Feature Presentation: Aslam Hunani/Rediff
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