In his first media interaction post the announcement of the $3 billion acquisition for 60% stake of RBL Bank, CEO Shayne Nelson said the transaction was a strategic decision to “turbocharge” growth. The capital commitment also reflects the UAE government’s confidence in India, said Nelson, the man responsible for transforming the Dubai HQ-ed bank with assets nearly quadrupling to $310 bn in the last 12 years and market valuing leaping 11x to $48 bn.
“It also aligns with the growing investments of our clients into India. It positions us well for future profitability while benefiting India and our existing customers around Gulf Cooperation Council (GCC) countries.” He added that he would “love to” hike their economic interest further. “If you’re a long-term investor willing to put in a large capital commitment, a forced glide-back makes the investment unattractive. It’s crucial because if India wants foreign capital, there must be room for such arrangements. We’re not an individual promoter; we’re a financial institution and we would love to go to 74% if given a chance.”
Nelson also strongly pitched for voting rights being at par with economic interest in a bank. “To attract foreign investment, removing the 26% voting cap and allowing voting rights equal to shareholding would make a big difference. It requires a parliamentary amendment, but it would boost confidence and capital inflows,” he said.
At a time when Japanese banks are also aggressively scouting for growth opportunities in India, Nelson, an Australian by birth and a Chief Risk Officer of Standard Chartered Bank, said the big advantage for RBL and Emirates to leverage upon is the “NRI corridor between India-GCC-Africa.”
GCC remittances he said account for 50% of NRI flows to India, and Emirates is present in those corridors. “The large corporates who already bank with the bank can now be onboarded to the RBL platform. SME banking is something we are good at and operate in all our markets as we think they are the future of any country. Trade and capital flows should also grow.” Emirates NBD, UAE’s 2nd largest bank, positions itself as a regional financial sector powerhouse operating in just 5 key markets of Saudi Arabia, Turkey, Egypt and India along with their home market.With deposits shifting to wealth products, Nelson said he sees huge opportunities in wealth management and investment banking in India and did not rule out “bolt on acquisitions” to consolidate their market share.Acknowledging RBL’s as a mid-tier private bank in India with $1.8 bn capital, Nelson argued with the additional capital boost, a lending book of over $25 billion is achievable. “Our first priority is to leverage this capital.”
RBL as an acquisition target also worked since control was on offer unlike targets like Yes Bank or even IDBI, names with which they have been associated with at various points in time.
