SA’s most valuable banking group, FirstRand, has begun to close its branch in India, 14 years after making its foray in the Asian country that is expected to drive world economic growth in the next few years.
The lender, valued at about R375bn on the JSE, said in its annual report that after a review of Rand Merchant Bank’s (RMB) strategy in India it decided to close the India branch and replace it with a representative office.
“The branch closure process is under way,” the group said.
“The representative office will focus on facilitating trade and investment activity in the Indo-Africa corridor. RMB has recently established an advisory business in India (RMB Capital India), which is focused on capital raising and M&A and has a licence from the Securities and Exchange Board of India.”
The bank did not elaborate on why it is winding the branch down and did not respond to requests for comment.
FirstRand established a branch in India in 2009 after getting a licence as a scheduled commercial bank from the Reserve Bank of India.
The Indian arm, managed by RMB, was also licensed to undertake financial advisory business in the country.
The strategic review is said to have taken place in 2021. FirstRand executes its strategy through its portfolio of businesses comprising RMB, FNB, WesBank, Aldermore and Ashburton Investments.
RMB last year established an entity called RMB Capital India, which focuses on the investment banking offering in-country and in the India-Africa corridor.
Trade between India and SA, both members of the Brics bloc, has been growing over the years, with an uptick in volume expected to ramp up in coming years.
Africa portfolio
RMB, the corporate and investment banking arm of FirstRand, last week reported a 9% rise in normalised profit for the year ended June and a return on equity of 21.2%.
RMB’s broader Africa portfolio contributed 31% of the company’s profit in the year under review.
“It is worth noting that a key contributor to our performance was our broader Africa portfolio. We can enter the 2024 financial year with confidence. We have an amazing team and a clear articulated ambition and strategy working towards 2028 and there is amazing momentum in our business,” RMB CEO Emrie Brown said after the release of the company’s results last week.
The company is also looking at facilitating R200bn in sustainable finance by 2026. In the year under review, RMB executed 35 transactions and facilitated R36.3bn in sustainable finance.
Last year it opened a representative office in New York to facilitate US business flows into Africa after getting approvals from US authorities.
“As part of our broader Africa strategy, and in addition to our specialised offerings in the UK and India, we are excited about the establishment of a presence in the US through a broker-dealer business and representative office to expand our offering to our clients,” said Brown.
“Our presence outside Africa allows us to facilitate capital flows and investment between the continent and international capital markets, while increasing our proximity to multinational clients that have traditional banking requirements in our various presence markets.”
Insurer Sanlam’s CEO Paul Hanratty two weeks ago told Business Day that India’s economic tailwinds, driven by domestic consumption and investment, will cause the group to reap the rewards for years.
The IMF expects India’s economy to grow more than 6% over the next few years. It will eventually be the world’s third-largest economy.
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