In early August, CEO of Credit Suisse Brady Dougan embarked on a three-day tour of India signaling the importance of the Bank’s presence in a market whose rapid growth continues.
The trip included Town Halls in Mumbai and Pune, as well as meetings with the CEOs of some of India's leading corporates, and with senior government officials including India's Finance Minister P. Chidambaran, and its Commerce and Trade Minister, Kamal Nath.
In both Town Halls, Dougan outlined Credit Suisse’s global strategy and
discussed how its commitment to the fast-growing Indian market is a critical component of the Bank’s strategy in the Asia Pacific region and beyond.
"In the coming quarters, we have a unique opportunity to advance our strategy and take on the most important competitors in the market. This is where we can and must move the mark," noted Dougan. "India remains poised to grow at a near double digit rate for several years now, even if the growth is punctuated from time to time by brief pauses."
Credit Suisse Builds Business in India
When questioned about Credit Suisse’s India franchise, Dougan spoke with confidence. "We’re off to a strong start," he said. "In 2007, we re-established Stock Brokerage operations and local Investment Banking coverage. In 2008, we established a wealth management business." He pointed to opportunities for the Investment Banking division in the region in such areas as cross-border M&A, specifically in the resource and technology sectors, as well as IPOs and Private/Structured Finance.
With an annual growth rate of 30%, the wealth market is a significant component of Credit Suisse’s business in the region and is driven by the increased demand for more sophisticated financial solutions. In the next three years, the Bank is looking to position itself as one of the top three players in India’s wealth management market.
Asset Management has also made a positive start with Credit Suisse sealing several large deals, including a $20 million stake in Shree Ganesh Jewelry House and, more recently, a $110 million commitment to Indu Project Limited, a leading Indian construction company. This venture captures the synergies of Credit Suisse’s "One Bank" philosophy drawing on the strengths of the Bank’s different entities, encompassing Credit Suisse Private Equity Asia, DLJ Real Estate Capital Partners and Credit Suisse Real Estate Finance Group.
"When we look at markets in India, the growth prospects over the near, medium, and longer terms are excellent and there are going to be great opportunities as a result. With regard to the opportunities that we see in India, our global capabilities match very well with the business here," said Dougan in a recent interview with India’s influential financial newspaper The Economic Times.
Pune Emerges as Key Center of Excellence
Pune stands at the heart of the Bank’s global Center of Excellence (CoE) strategy. "The diversity of our activities in Pune underscores the strength and diversity of talent that has made India such a center of new industry and innovation," said Dougan at the Pune Town Hall, which was attended by 700 staff.
Established in November 2006, the Pune CoE provides support for IT, Operations and Product Control, as well as a range of front office functions, including Equity Research and other analytic functions. Today, the Pune CoE boasts 1300 employees and consultants and is an integral player in the Bank’s network of CoEs.
"Global institutions that have already made the investment in a flexible, scaleable operating platform and have the ability to tap high quality talent to serve local, regional and global needs will be those that succeed," Dougan added.
Emerging New Player
In an interview with the Financial Times, APAC CEO Kai Nargolwala, who accompanied Dougan on his tour of India, maintained: "India is facing some significant challenges in terms of inflation and oil prices, but while there will be some slowdown in growth, we don't see it as anywhere near as severe as one might expect to see in the US or Europe."
In the long-term, the outlook for the Indian economy remains positive. Four key factors have been driving such expansion, including deregulation, privatization and liberalization reforms; a rapidly increasing workforce; a growing middle class, which is fuelling domestic demand; and higher capital availability. Research suggests that India has the potential to be the world’s third largest economic power by 2050.
However, in line with the world economy, India is experiencing a trend toward rising inflation, which currently stands at a 13-year high. As the economy has been slowing, GDP growth and industrial production growth have also been experiencing a downward trend. Still, figures suggest that the market is expected to remain on a 6% to 9% growth trajectory in the medium- to long term.
"Given Asia’s importance in driving economic growth globally, the strides we take today to advance our Asian businesses will pay long-term dividends," concluded Dougan.
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