In just two years, Barclays’ emerging
markets banking unit has expanded its operation across 14 markets,
grown its distribution network by an additional 250 sales points
and more than doubled customer numbers to nearly 4 million.
talks to Vinit Chandra, chief executive of
the division.

The contrast with erstwhile rival Royal Bank of Scotland (RBS)
could not be starker: while Barclays steps on the gas to grow its
international footprint, RBS has spent the first half of the year
executing one of the biggest U-turns in recent banking history by
scaling back its overseas ambitions, the legacy of the ill-fated
acquisition of part of ABN AMRO. Vinit Chandra, Barclays GRCB

For Barclays, the lucky loser in the battle to
snap up ABN AMRO, the stated goal is to derive profits from its
international activities on a par with those seen at its UK

That means further investment in its rapidly
growing Western European retail unit (principally France, Italy,
Portugal and Spain), where sales points have grown from below 800
units to more than 1,100 in the past two years.

And then there are the emerging markets, where
the contrast with RBS is most marked. Barclays will seek to grow
further its Asian presence, where it considers itself underweight,
augmenting recent investments in India, Pakistan and Indonesia.

Vinit Chandra, chief executive of the bank’s
Global Retail and Commercial Banking (GRCB), Emerging Markets unit,
told RBI the bank will become a significant player in its
new markets. GRCB Emerging Markets has grown in the past two years
from 550 distribution points to 805, with customer numbers more
than doubling to exceed 4 million.

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“Our strategy is to be ‘deep’ in the markets that we operate in
rather than ‘shallow’ in every market,” said Chandra.

“We are truly proud of the growth of the unit
since its inception in 2007, especially since we have continued to
grow our customer franchise across the region even through the
recent global downturn,”

Chandra believes the 14 countries in question,
organised in four geographic areas – East Asia and Indian Ocean
(India, Indonesia, Pakistan, Mauritius and Seychelles); Middle East
and North Africa (UAE and Egypt); East and West Africa (Ghana,
Tanzania, Uganda and Kenya); and Southern Africa (Botswana, Zambia
and Zimbabwe) – offer tremendous untapped potential.

“We are here for the long term. We will stay
focused on our customers and ensure that we provide them with a
world class suite of products and services that meet their current
and emerging personal and business needs,” he explained.

In the retail sector, the bank will step up
its efforts to grow take-up of its mass-affluent Premier Life
offering, mirroring the successful strategy of HSBC’s promotion of
its Premier product and the recent relaunch by Standard Chartered
of its Priority Banking line (see RBI 616).

“Our Barclays Premier offering is today among
the most sought-after offerings of the bank. We have also just
launched our Platinum credit card product which again targets this
segment squarely and offers cardholders an impressive array of


Barclays – GRCB divisional
performance, profit before tax





% change

UK Retail Banking




Barclays Commercial Bank








GRCB – Western Europe




GRCB – Emerging Markets




GRCB – Absa




GRCB total




Source: Barclays

900,000 customers in India

He bristles however at the
suggestion Barclays’ initial Indian strategy, when it rolled out
full retail banking services in 2007 and targeted all sectors of
the market, had been flawed.

“The strategy employed by Barclays GRCB in
India was correct at the time it entered the country, given the
social-economic conditions at the time,” he stressed.

“Today, we have more than 900,000 customers in
India covering a range of segments and we will continue to grow
that base and serve our customers in the best way we can.”

Going forward, however, he said the bank will
“fine-tune” its segmentation policy.

“This is something we firmly believe you have
to continue to do on an ongoing basis: analyse the market vis-à-vis
your strengths relative to customer needs and competition,” Chandra
said. “This has resulted in our decision to ‘refocus’ on the mass
affluent and affluent segments of the market, which are, to our
mind, of lower risk and more profitable.”

Chandra also believes customers from this
sector are most likely to appreciate the bank’s customer service
and stay loyal.

But he stressed the bank will continue to
serve the mass market in these emerging economies and grow customer
numbers “on a selective basis, though the current market
dislocation has reduced the appetite of much of the mass

The bank has, he said, invested over £240
million ($399 million) in setting up the GRCB business in India
over the past two years, with further investment planned for the
country. Barclays - GRCB Emerging Markets

“The fact that India continues to grow at more
than 6 percent GDP even in these difficult times should show you
why we are so bullish about our investments there. Barclays has a
300-year heritage around the world. We intend to be in India for at
least the same period of time,” said Chandra.

In all, it has six operating units in the
country – Barclays Capital; Barclays Wealth; GRCB; Barclays Loans
& Investments; Barclays Technology Centre; and Barclays Shared
Services (its BPO arm).

Combining the retail branch network and its
consumer finance arm, the bank currently has more than 110
distribution points in the country, a network it wants to

“We will continue to expand as the central
bank gives us permission to set up new branches and infrastructure
across the country,” Chandra said.

Channel investment in India has also included
its innovative mobile-banking service, Hello Money, rolled out in
March 2008.

Since then, active customer numbers for the
service, incorporating enquiry and transaction level offerings such
as funds transfer and value added services such as mobile recharge
and bill payment, exceed 10,500.

“It is widely acknowledged to be the most
user-friendly m-banking application in the Indian market and is a
great example of Barclays’ commitment to innovate and bring about
changes in the way people bank,” Chandra stated.

As a result of the Indian success, Hello Money
recently launched in Kenya and Botswana, said Chandra, and will
debut in a number of additional countries which fall within his
emerging markets domain.

And on the subject of distribution generally,
Chandra is at pains to say the bank will tailor its distribution
approach to the needs of each country, with the traditional branch
only one pillar of its strategy.

“I must ask you, if you remember the last time
that you walked into your branch to complete a transaction?
Personally, I really don’t remember,” he said.

Branch numbers will however grow, with Chandra
stressing that “we will work closely with the regulators in each of
our markets to ensure that our requests for additional branches are
well received.”

Upbeat regarding

Of the bank’s recent international
investments, he is particularly upbeat about Barclays prospects in
Indonesia (“an extremely interesting market”) following its
acquisition of the 10-branch-strong Bank Akita, a local lender with
a strong consumer finance arm, especially auto finance.

With the sixth-largest population in the world
and the largest economy across South East Asia, the country has
been relatively untouched in the global crisis, with the economy
growing at over 4.4 percent in both the first and second quarters
of 2009.

“The market has also seen significant progress
in the banking sector in the recent past, a fact which also played
a key role in entering Indonesia,” Chandra added. “We see
tremendous potential to cater to the needs of discerning local
customers across the commercial and retail banking sectors are
confident we will see rapid growth in the country in the months
ahead.” Barclays - GRCB Emerging Markets profit

As for products, Chandra said Indonesian
promotions will include a range of CASA services, time deposits and
personal loans, as well as the launch of the Premier Banking

Looking ahead, Chandra confirmed the bank
would continue to grow its international retail network, but
unsurprisingly gave away no secrets about any new markets he wanted
to enter.

“We offer retail banking services across all
the 14 emerging markets countries that we currently operate in and
remain open to exploring quality growth opportunities – both
organic and non-organic – in these markets and in the countries
that we plan to enter in the medium to long term,” he


Profit up 10%… though
retail banking down significantly

Barclays reported half-year earnings up 10
percent to £2.98 billion, one of the better results from a global
bank. The best performance came from its investment banking arm,
Barclays Capital, which grew profits 100 percent year-on-year to
£1.05 billion. The group’s cost-income ratio improved to 54 percent
from 57 percent.

The weak areas were UK Retail Banking, down 61
percent to £268 million, and its GRCB Western Europe unit, down 73
percent to £31 million. Impairment charges increased 86 percent to
£4.55 billion.

John Varley, group chief executive, said:
“Notwithstanding the tumultuous events of the last two years, we
have remained independent and profitable. It has been a humbling
experience but we have been able to strengthen our balance sheet
and have continued to invest to broaden our business base. We are a
British company with an international footprint and earnings

He added: “If we look at the shape of the
group by business line, the Lehman acquisition, the sale of
Barclays Global Investors, and the impact on GRCB’s profits made by
the compression of liability margins and rising impairment, will
skew the relative contribution of investment banking for a period
of time. But our intention continues to be that… about two-thirds
of group profits will come from GRCB and Barclays Wealth.”

The sale of its investment arm, Barclays
Global Investors, to BlackRock, agreed for a consideration of
approximately $13 billion and expected to complete at the end of
2009, will give Barclays an economic stake of 19.9 percent in the
enlarged BlackRock Global Investors business – and help give a
boost to the second-half balance sheet.