Mumbai : At a time when foreign banks in India are slow moving, Germany’s Deutsche Bank is looking to expand across all its verticals, while re-evaluating the growth prospects in some sectors. India is the only market outside Europe where the bank has a retail presence. In an interview with Mint, its chief executive for Asia Pacific, Alexander von zur Mühlen, explained why environmental, social and corporate governance (ESG) is an opportunity, not just a need, which is described differently in this part. is to be handled. World. Edited excerpt:
How do you see the growth opportunity in India?
India has performed beyond our expectations over the years. The services we provide within India are in response to the services we have at the group level. Deutsche Bank is also performing very well in Asia Pacific and is providing higher return on equity as compared to the group level. Due to the increasing number of multinational corporations coming from this part of the world, the need for cross-border banking services, whether from hedging or financing point of view, transaction banking will come into play. It is the bridge between Europe or Inter-Asia or America. The India franchise has been great for us and we have high aspirations in the years to come to be able to grow it. We have over 14,000 employees and India is the only country in the world outside Europe where we have a retail banking franchise. We also have group-wide service capabilities in technology and operations areas that are outside India.
Are you planning to expand your operations here?
Prudential risk management is very important for any bank and I mention this because our risk provisioning has been very low in India over the years. Our activities, including retail banking, have been very strong throughout. Thanks to prudent risk management, we have navigated safely through challenging market environments. We see expansion across all entities, including thriving retail banking and private banking activities, as much as the corporate and investment banking space. We are looking forward to growth and have infused nearly $1 billion in capital in the Indian facility over the past three years, and we look forward to more growth opportunities.
Are you cutting into your Russia performance?
We feel comfortable with the direct and indirect exposure we have on Russia because we have been reducing our exposure there significantly over the past few years. The Bank is very focused on serving our multinational customers including German household names with regard to their activities in Russia. As a result, our local exposure has been very muted from a credit and currency perspective.
What are your views on ESG, especially in India?
We see ESG not only as a necessity, but also as an opportunity. Financial markets around the world are gearing up in this direction and the reality is that ESG ideas are becoming increasingly central to licenses to operate. ESG needs a lot of transition work in this part of the world. There are requirements for new products, advice and a different approach to the financial markets. We want to deeply engage ourselves in this transformational journey with our customers. It is not helpful for a customer, investor or bank to see a black-and-white method for classifying an entity as ESG-compliant. We need to recognize that the work that needs to be done towards the transition to emerging markets is bigger and more complex. We look at it in a very dedicated manner and we have made dedicated ESG efforts for this area. If you look at it superficially, in Europe the ESG is focused on ‘E’ but in this part of the world it is much more.
Do you think India will be able to become a manufacturing hub in the coming years?
India is going to be a huge beneficiary of supply chain migration as well as diversification. We are seeing the world talking a lot about this since the emergence of Covid-19. We also recognize that a lot has happened in some industries and logistical constraints had to be overcome. But if we look at the impact the Russian war in Ukraine had on the supply chains of many industries, it speaks as much to migration as it does to alternative locations. Of course, having these optional capabilities will add cost in many industries but you need them. If you think about production-heavy activities, there are not many places that can produce at a certain pace keeping a certain quality and quantity in mind. There aren’t many markets when you’re looking for real absorbable capabilities, and India is one of them.
How does Deutsche keep pace with the ever-changing regulatory landscape in this part of the world?
I don’t think regulations are meant to make life easier for financial sector companies and understanding the changes is part of our business. Let me give you a completely different perspective on local regulations, not just for India but for Asian economies as a whole. The bulk of banking products, given the regulations, should be done with full scrutiny and credibility not only from our side but also from the customers. Everyone can and everyone does banking products in the US and Western Europe. Doing so in small and emerging markets where the rules sometimes change on a daily basis is almost an art. This requires you to actually be on the ground. This is the Unique Selling Proposition (USP) for banks to get this right, to know exactly the way.