Deutsche Bank makes bumper equity infusion in India

Deutsche’s retail business in India includes loans to individuals and wealth management.

deutsche bank

The bank’s net profits in India operations have fallen for three years in a row.

MUMBAI: Deutsche Bank has made its single-largest equity infusion in India, placing bets on digital technologies to expand its retail operations and double revenue from that business in the country. The Frankfurt-headquartered lender has put €500 million (about Rs 4,000 crore) in December, its second infusion within a year, taking its total capital to €1.9 billion, Werner Steinmueller, Asia Pacific CEO, said in an interview.

“This capital infusion signals our commitment to a very important market and will be used to expand our businesses in India,” Steinmueller, who is also a part of the bank’s management board, said. This infusion also comes at a time when Deutsche Bank is looking for a new CEO in India after Ravneet Gill resigned last month to take the top post at Yes BankNSE -0.83 %. Steinmueller said one reason for his trip to India was to take stock of the business and start the process of finding a replacement. “I will look at all possibilities, both from inside and outside, and find a replacement as quickly as possible,” Steinmueller said.

Deutsche Bank’s capital infusion into India comes amid intermittent speculation of the German lender’s plans for its retail business in India, the only consumer-facing business outside its home market.

Steinmueller acknowledged that the leadership had thought about selling its remaining retail business in India like it had done in markets like Poland or is in the process in Portugal. However, the decision has now been made to retain the business. “Yes, we considered repositioning our retail business, but at the end we came to a different conclusion and decided to keep it. The decision was made last year,” he said, adding that by the end of 2018 the bank had chalked out a plan for its Indian business.

Deutsche Bank’s retail business in India includes loans to individuals and wealth management. It has previously sold its Indian credit card, asset management and mortgage businesses as it moved towards investment and corporate banking in the last decade.

The bank’s net profits in India operations have fallen for three years in a row. In the fiscal ended March 2018, the bank’s net profit dropped 8 per cent to Rs 910 crore from Rs 987 crore a year earlier as interest income fell 5 per cent and fee and trading income fell 13 per cent. Steinmueller, however, said the reported Indian profits are not a full reflection of the country’s potential as a lot of the India-linked revenue is booked in other countries like Singapore.

Deutsche Bank’s plan is to expand retail and lending to small and medium enterprises (SMEs) without adding new branches by using the unique financial technologies the country has to offer.

“With the infrastructure we have in India, like instant payment systems and client identification, which helps in automating KYC, we can do retail digital banking and automate SME receivable financing as much as possible. We plan to double retail revenues in the next five years,” Steinmueller said.



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