Axis Bank prunes overseas presence as it consolidates local business

It closed branches in Shanghai and Colombo last month while it is in the process of winding up Hong Kong Branch, senior bank officials said. It is also looking to surrender its UK banking subsidiary license and close operations by April 2021.

India’s third largest private sector lender is looking to optimize overseas operations in line with the overall corporate strategy. The plan is to consolidate the services related to corporate banking, trade finance, treasury and risk management solutions through its Dubai, Singapore and GIFT city branches. Axis also has representative offices in Dhaka, Abu Dhabi and Sharjah.

Axis’ group executive for wholesale banking Ganesh Sankaran said that the bank is closing down branches where it does not have corresponding business opportunities.

“We will only continue with our overseas branches and offices in a well thought manner where they have deep synergies with Indian operations and business goals,” he said.

The bank closed its Shanghai branch on November 12 and Colombo branch on November 15.

Overseas corporate loans stood at 14.5% of corporate book, where primarily the bank deals with top Indian corporates and quasi sovereign entities.

Out of a total loan book of Rs 5.76 lakh crore at the end of the September, it’s overseas book contributed merely 8%. Out of the total corporate loan book of Rs 2.10 lakh crore, overseas book contributed Rs 30,494 crore at the end of the September. This was Rs 41,855 crore at the end of March 2018.

On Indian operation, the bank is engaging with better rated corporates, focusing more on working capital loans and transaction banking products. The bank’s corporate loans grew 22% year on year as against 11% rise in overall loan book.

The bank put the probable debt restructuring pool at Rs 5500 crore. “Restructuring is likely to be a small portion of our portfolio across segments. We have prudently covered for the risks emanating from restructuring and as on September 30, we hold a 19% provision on the entire estimated probable restructuring pool, in excess of the regulatory minimum of 10%,” Sankaran said.

RBI fixed December 31 as the deadline for debt restructuring requests from borrowers coming under stress due to the pandemic.

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