‘Banks have obligation to play a constructive and value adding role in economies where they operate’

Anna Marrs, regional CEO of Standard Chartered Bank for ASEAN and South Asia and CEO of Commercial and Private Banking, recently visited Nepal to review the performance of SCB Nepal and set the targets in terms of business expansion and minimising the operation cost. During her three-day visit last week, Pushpa Raj Acharya of The Himlayan Times caught up with her to learn of her observations of banking business in the country, growth potential of SCB Nepal and its priorities in the coming days. Excerpts:

Standard Chartered saw change in leadership at the group level some two years back. What has been the impact of this change and have you started seeing the expected results?

In between 2002 and 2012, the bank grew rapidly and even managed to do relatively well during the global financial crisis of 2008-09. But along with the growth, we also faced some problems while coming to 2015, including the credit situation. Hence, the board and shareholders decided to take a completely different direction thereafter. Bill Winters was appointed as the new CEO in June 2015 and he put together a management team — many of whom were already with the bank, while some were new — to frame the strategies on how the next decade should shape up for the bank. So, now we have three big priorities. Securing foundation is our top priority. There  are concerns in the market about credit risk and there are questions about our capital, as a strong capital base is critical for a solid foundation. Secondly, we are lean and focused on operation cost reduction. Standard Chartered has set a cost reduction target of $ 2.9 billion in between 2015 and 2018. We are focused on process efficiency, trying to be faster in service delivery through process reengineering. Finally, over the 10 years of substantial profit growth from 2002 to 2012, we did not invest enough in technology, which is why we are going to invest $1.4 billion in technology change. Now the technology upgradation, along with changes in global leadership and in national management have been taking the SCB towards right direction.

So you are happy with the progress?

It takes time for a bank with presence in 70 countries to make the turnaround and improve its overall performance. But I think we are already half-way through our goal.

You look after the ASEAN and South Asia (ASA) region that significantly contributes to the overall performance of Standard Chartered. Which are the areas in which you see the potential for growth and position of ASA in the global map in the near future?

ASEAN and South Asia account for one-third of the bank’s income. When I travel around our markets in South Asia and meet the clients, I’ve found the bank’s history and relationship with the clients quite incredible. Across ASEAN and South Asia, gross domestic product (GDP) is growing at an average pace of about five per cent and many markets are sustaining at that pace. There are some high growth markets and for this year Nepal is one of them, with growth projection of nearly seven per cent. In ASEAN and South Asian market, foreign direct investment is growing, intra-regional trade is expanding. Also, China trade corridors and other trade and investment corridors are being established. As the only international bank with presence in all the ASEAN countries (we have 700 branches in China alone), we can ensure that Chinese or Japanese companies invest in Nepal; Indian companies invest in Sri Lanka or Vietnam, etcetera. We can capture that business. So, the network of the bank is important. We are proud about of our retail franchise and here in Nepal, we are trying to expand branch network so that we can offer new products and expand our client base.

Nepal is a relatively small operation for Standard Chartered. From a macro perspective, what has attracted you to remain in this market and what potential do you see for this country?

We did further public offering (FPO) and raised the paid-up capital of SCB Nepal as per the requirement of central bank very recently. We are competitively different in this market in terms of our ability to connect Nepal to the opportunities outside and vice versa. Nepal is still undergoing a transition, but I feel things will be a whole lot different five years down the line. Despite the challenges, Nepal is already a profitable market for us. By putting in the investment while focusing on better service delivery, I believe we can improve our profitability further.

How is the bank supporting the economies where it operates? And how is SCB Nepal working on being compliant with local and international banking rules?

All banks have obligation to play a constructive and value adding role in the economies where they operate. And in many of our markets, financial inclusion is an essential part of economic development. We may not have niche advantage in financing in rural areas like the local banks do. But we have been playing a unique role in helping the banking industry in Nepal. Today, the US dollar is the currency of global trade and we are involved in the dollar flows. We clear about half of the dollar flows in Nepal. The US authorities are very mindful about anti-money laundering and other kinds of compliance required in financial transactions. We have invested a lot over the last five years to get this right. The bank has invested over $1 billion to ensure compliance of financial rules. We are helping local banks to raise their standards to finance trade in US dollar and connecting Nepal economically with rest of the world. Moreover, many people holding top positions in most Nepali banks started their career with Standard Chartered. In this sense, you could say we are also the grooming platform for the best of the best in the banking industry. In terms of productive sector lending, we have no choice other than to meet the target set by the Nepal Rastra Bank (NRB). Though we are not focused on rural banking, we have given priority to productive sector lending.

There are some who question whether SCB Nepal can match the growth  being reported by other competitor banks. What is your say on this?

The  FPO certainly positions the balance sheet nicely for growth. Having  said that, understanding the real economy and avoiding the bubbles is  always discussed during our risk assessment meetings. So now, what I  want from the management team here is to grow in safe and differentiated  way. Attracting FDI in power sector has been given importance in the  development of economy, and we could find a way to play an appropriate  role for the same.

During your visit, you must have met and interacted with the banking sector regulators, clients and other stakeholders in Nepal. What message are you taking back from your visit?

I am taking back the ambitious plans of our team here. I have seen the fire in their eyes and plans on how we can grow, particularly in retail banking. I feel this is a good time to be in Nepal, to discuss how we can be connected with the ambitious FDI growth targets of the country. Even though it has just been 30 years since we have begun our operations here, I am overwhelmed by the faith that our clients have on us. We would like to be a part of the economic development in Nepal.