The increase in corporate and investment banking activity in the Indian market, as it rebounds from the Covid-19 pandemic hit, has caught the attention of Barclays prompting it to announce an investment of more than $400 million into its business arm in the country so that it can tap into the opportunity.
This also marks the single biggest investment by the bank in the Indian market within the last three decades and has been planned by the British lender after it exited the retail business in the third largest economy in Asia in 2011. It then exited the equity investment space in 2016.
The investment by the bank is aimed to help[ growth in corporate and investment banking activity in the market along with its business dealing with its private clients businesses, Barclays said on Thursday.
According to Dealogic, the British bank has generated revenues of $498 million from its investment banking in India so far this year compared to revenue of $339 million generated by it in the same period a year ago and $538 million that it generated for the entire of 2020.
In terms of USD bond volume, Barclay’s is the leader in debt capital market in India and enjoyed a market share of 14 per cent year-to-date %, according to Dealogic. The market share of Barclay’s rivals in the Indian market – that of JPMorgan and Standard Chartered Bank is at 13 per cent, while HSBC enjoys a share of 12 per cent.
“As economic activity gathers momentum, there is increased demand for capital from clients,” said Jaideep Khanna, Barclays country CEO for India.
“Last year was a very good year for debt capital market in India, particularly as domestic bank credit didn’t take off much. There was a lot of interest in global credit and the overall market has been robust,” said Ananth Narayan, associate professor of finance at S.P. Jain Institute of Management and Research.
Barclays India’s Tier-1 capital will be increased by 55 per cent with the fresh capital infusion.
“According to central bank norms, there are limits placed on what a lender can do with respect to their balance sheet, but now that the bank’s overall capital base has expanded, its ability to lend more has increased,” according to a source familiar with the matter, who did not wish to be identified as he was not authorized to speak to the media.
Barclays has been operating in the Indian market since 1990 and is currently present in six locations in the country. It has more than 600 employees in India in its corporate banking business.
(Adapted from EuroNews.com)