ICICI bank to enter into private banking

ICICI bank country’s second-largest bank is getting into private-banking by extending its retail segment to the higher-end of the market. However ICICI is making entry late in this segment whereas for the past few years host of foreign banks like BNP Paribas, ABN Amro, Deustche Bank, Citi, HSBC, Merrill Lynch, are already operating in this segment and will have to face competition from them.

In India the number of millionaires (those with liquid assets of over Rs 4.3 crore) has increased which is estimated to be at over 1 lakh, has allured banks to get into private banking space. According to ICICI Bank officials there are around 20 % of the bigger players in the market.

Private banking refers to the personalized service provided to elite customers as against mass retail banking. In fact private banking is more people and process-driven than capital intensive. ICICI Bank main focus in the beginning will be more on the middle and the upper ends of the markets. Recently it has doubled the minimum average balance for its savings accounts to Rs 10,000 from Rs 5,000 earlier.

Similarly to other banks in India, ICICI Bank has also set $1 million as an entry limit for private banking. The bank is having a team of 250 relationship managers globally and plans to add another 100 to its team. V Vaidyanathan, ED, ICICI Bank said, “We already have 2,500 customers and are looking to add 1,000 more in the next one year. We will be launching this product in all the countries where we have a presence. Globally, this is a $30-trillion opportunity and is growing at a fast pace.”

Bank will be facing two way challenges from the existing foreign banks as well as from new entrants. Swiss bank UBS, the world’s largest private banker, has obtained a banking license and is expected to enter the market soon. Other players like Morgan Stanley have recently launched private banking in the country. In addition to this there is a host of Indian players in wealth management; in this segment ICICI Bank is already having its presence for the past few years. ICICI Bank officials claimed that they are already having $26 billion of assets under management, of which $19 billion is in India.