‘WeHaveNotBeenAp­proached­byAny­one’

The Economic Times - - Companies: Pursuit Of Profit -

Spec­u­la­tions about many pri­vate banks look­ing to buy stake or merge with Axis Bank to ben­e­fit from its strong re­tail fran­chise are rife, but its chief ex­ec­u­tive Shikha Sharma tells Saloni Shukla and MC Go­vard­hana Ran­gan in an in­ter­view that the bank can grow for years and keep de­liv­er­ing re­turns to share­hold­ers as a stand­alone en­tity. Edited ex­cerpts:

We are hear­ing about Axis be­ing a beau­ti­ful bride. Is Axis in play? Why should Axis be in play? We have not been ap­proached by any­one, so I don’t know where all these sto­ries are com­ing from. There is ab­so­lutely no truth to this.

You have been an in­vest­ment banker your­self, and you know there’s al­ways a pos­si­bil­ity of peo­ple who are think­ing along these lines... Yes, but that doesn’t mean there’s any­thing hap­pen­ing right now, be­cause some­thing will hap­pen only if there’s a real con­ver­sa­tion or a for­mal pro­posal, and there is ab­so­lutely noth­ing of this sort go­ing on. We haven’t been ap­proached by any­body, and frankly for Axis at this point of time, there is so much to do.

We have al­ways be­lieved in the In­dia story. I have now been with the bank for al­most eight years. It has al­ways been a strong fran­chise, and in the past eight years, we have only grown and strength­ened that fran­chise. So, in the re­tail busi­ness, our mar­ket share on the de­posit side has gone up from 2.5% to about 5%; in the re­tail as­sets, we have a 6% mar­ket share; in cards, we are 10%; and in mo­bile bank­ing, we are 13%.

So, you can grow on your own with­out ben­e­fits of merger? When­ever we talk in­ter­nally, we think we are in a sweet spot be­cause when you have 1-2% mar­ket share, you don’t have rel­e­vance. When you get to 12-15% mar­ket share, you be­come big and find­ing growth faster than the in­dus­try be­comes a bit tougher. So, at this point of time, do­ing any­thing inorganic would be a dis­trac­tion for the bank. We are well cap­i­talised, so we don’t have a short­age of cap­i­tal, we have got the peo­ple and the process ca­pa­bil­ity, and merger at this point of time there­fore will be a com­plete dis­trac­tion.

You listed your strong busi­ness, fran­chise and dis­tri­bu­tion ca­pa­bil­i­ties. Has that it­self made you an at­trac­tive propo­si­tion for those who don’t have it? That’s al­ways nice to hear. It’s good to feel like a beau­ti­ful bride that ev­ery­body is as­pir­ing for, but the point is that if the beau­ti­ful bride is not putting up her hand for mar­riage, then you can have a lot of suit­ors but there won’t be a mar­riage.

If you have to wear your in­vest­ment banker hat again, would you con­sider an inorganic growth pro­posal? That’s a spec­u­la­tive ques­tion be­cause there’s no such thing on the hori­zon, and, as I said, at this point of time, our clear fo­cus is to grow and go af­ter the op­por­tu­ni­ties that are im­por­tant to the economy. The merg­ers work well if you are do­ing it for a syn­ergy-value per­spec­tive. If you do it for a trans­ac­tion value, most merg­ers do not pay off. In all, our cho­sen busi­nesses, we have built ca­pa­bil­ity so there aren’t any gaps. We think that scale for the sake of scale to take out costs is not the the­sis that is right for us at this point of time.

But what is the bank board’s opin­ion on the merger spec­u­la­tion? We have a very ac­tive and a very pro­fes­sional board, so we have open con­ver­sa­tions about ev­ery­thing and they know that noth­ing is hap­pen­ing. We are not a pro­moter-owned com­pany, we can­not do a con­ver­sa­tion with­out en­gag­ing with our board. The fact that there is no en­gage­ment with the board means that there’s no thought of this sort.

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