South Africa-based FirstRand Bank is withdrawing from India, becoming the second bank to retreat from the market after Citigroup within a week.
FirstRand Bank, which oversees $118bn in assets, launched its India presence 12 years ago.
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The shut-down of its only branch in Mumbai will affect 50 jobs.
“Following a review of FirstRand’s strategy in India, the decision has been taken to convert the current branch to a representative office. FirstRand will be engaging with the regulators on this proposed change,” the bank stated.
The decision was said to be the result of several factors. These include difficulty in improving profits, competition and economic slowdown triggered by the pandemic.
Moreover, the bank was also affected by its exposure to IL&FS, which went bust in 2018.
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By GlobalDataFirstRand Bank launched its operations in India in 2009. It started lending to retail customers and SMEs in 2012.
In 2016, the bank decided to close its retail and SME lending business in the country and offer only corporate as well as investment banking.
It also dumped plans to launch a subsidiary in India, citing lack of scale and growing non-performing assets.
The move by FirstRand comes shortly after Citi’s announcement to exit retail banking operations in 13 markets, including India.
In addition to India, Citi will exit its consumer franchises in Australia, Bahrain, China, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
However, Citi said that its Institutional Clients Group will continue to serve clients in these markets.
