Mumbai: Jamie Dimon,chief executive officer of JPMorgan Chase and Co., the second-largest US bank by market value, is mightily impressed with the growth of Indian companies\u2014their sophistication, improved governance and globalization.
\nIn an interview on Friday, Dimon said the bank\u2019s India operations are almost as big as Italy and Spain combined and, in investment and corporate banking, India will be growing a lot faster than the developed nations. Edited excerpts:
\nJPMorgan came here even before India\u2019s independence, but in past 67 years, you continue to have a single branch despite seeing enormous opportunities in Asia\u2019s third-largest economy.
\nJPMorgan is not a retail company. It\u2019s a wholesale bank. We serve corporate clients, sovereign entities and we want more branches. We have actually asked the regulator for more branches to serve our clients and the decision rests with them. In the meantime, we have grown our business a lot in India. When I first got to JPMorgan Chase, I remember we were based in a building downtown\u2014we had two small floors, only had a handful of people and the global service centre was just opening. We were doing research on some 30-odd Indian companies; we had investment banking and a little fixed income and an equity operation.
\nNow in India, we do research on about 130 to 140 companies and that research is used around the world by people who want to know about Indian companies. We help Indian companies in India and also in the outside world. Multinationals from around the world are banked here. There are a lot of services and functions performed here which are performed for the whole world.
\nGiven a choice, how many branches would you like to have?
\nWe have, earlier in the year, made an application to the RBI (Reserve Bank of India) for six branches, which is in a combination of urban cities and under-banked areas. We are waiting for permissions and there are some local requirements in terms of adding some basic products to our offering, including individual accounts and opening branches in under-banked centres, which we are working to comply with.
\nYou are predominantly a corporate banker, but your other businesses such as asset management and brokerage are not very big. Is there any plan to push them?
\nWe manage $2.3 billion in assets here. I think that\u2019s grown three or fourfold since I first got to JPMorgan Chase. That\u2019s mostly fixed income but there is equity and some real estate assets. I know that a lot of people are talking about the slowdown is India\u2019s growth\u2014 from an average of 9% to about 4% or 5%, but a 4% or 5% growth rate is not that bad. India is going to grow because the population is growing, the businesses are growing. The economy may go up and down but the number of clients we serve in India will grow quite a bit in the next 10-20 years. So, we are looking at how many clients we are going to cover and what kind of services they will need from us. The economy will have its ups and downs but it\u2019s not going to distract us from trying to build up the business.
\nOutside the US, JPMorgan does not have any retail operations, but India is one market where everyone sees a big opportunity for retail.
\nTrue, but becoming a full-service retail bank in India is not for us. Competition is a hard thing. If I think we could come to India and open 50 branches in Mumbai, we would be destroyed by State Bank of India, ICICI Bank and HDFC Bank because they are already strong and powerful here. We would not get enough market share to pay for all the costs\u2014not just the local branch costs but other overheads. Conversely, ICICI Bank would probably have a hard time coming to New York city and doing it there. We can\u2019t do it right now\u2014it\u2019s too late. You could say maybe one day we could buy something\u2014I wouldn\u2019t rule that out. But (now) we can\u2019t even buy more than 4.9% (stake) in a bank in India and so for us buying something now is out of the question. Some of the folks who have a retail network started building it a long time ago, like Citi. It\u2019s too late now but things may change and maybe if the laws change we might be able to buy.
\nYou have very strong link with the Tatas. Ratan Tata is on your advisory board. What\u2019s your outlook on Indian corporations?
\nLook at the growth of Indian companies\u2014the sophistication, the improved governance, the globalization… You have had a lot of companies going overseas and I think it\u2019s just the beginning of this globalization trend. You may have short-term ups and downs but that\u2019s not going to stop the Tatas from buying JLR (Jaguar Land Rover). So I think they are going to continue to grow around the world like that and we have to follow our clients to support them. When our clients go to certain countries, we may need to be there too sometimes.
\nSo you continue to remain bullish on India?
\nYes.
\nHow much have you invested in India?
\nThe balance sheet here is about $14 billion credit and $1 billion of capital now. This will grow over time as we accommodate client needs. We also bank Indian companies when they go overseas. We couldn\u2019t do that if we weren\u2019t here. When I travel in America, people say you guys are building in India, what about here? I say when we are building in India, we are building for you too. I don\u2019t know if you know, but we bank over 300 multinationals, non-Indian companies in India.
\nWhat\u2019s India\u2019s contribution in your balance sheet?
\nIt\u2019s almost as big as Italy and Spain combined. In investment and corporate banking, India is going to be growing a lot faster than the developed nations. A lot of our revenue are coming from developed markets but emerging and developing markets are going to be more and more. In the corporate and investment banking business, 50% is non-US and that\u2019s going to grow faster than (the) US. The fastest growing parts are going to be emerging markets like India, Indonesia, China and greater China, Mexico, parts of Latin America.
\nIs the slowdown in India temporary?
\nI am not an economist and I can\u2019t really forecast the future. How many companies do you think will be in the size and scope which need JPMorgan to bank them 15 to 20 years from now? I will tell you it\u2019s going to be three times as many. I don\u2019t exactly know what path it\u2019s going to take but these companies have global ambitions; they have got great technology and global skills. They are strong in some areas than in others and the growth rate of may be a lot more than American companies.
\nThe Indian central bank seems to have failed to contain inflation despite 13 rate hikes. As a banker, what\u2019s your take?
\nI will have to analyse it more to have an intelligent position on that. I hear all the things you just said, but I don\u2019t know enough and someone told me today that a lot of inflation is coming from products you buy overseas\u2014mostly oil, gas and coal\u2014so that\u2019s a slightly different kind of inflation than local inflation.
\nIn a recent speech at the Council of Foreign Relations, you said, \u201cI am not worried about JPMorgan, I am worried about the US.\u201d What does that mean?
\nThat comment was related to our fiscal cliff. We need in America, good long-term fiscal policies and so does every nation. I think that nations have to think about what is a good policy that enhances growth and competitiveness and we need that in America too. I was answering a question about what the policy is\u2026 JPMorgan will do fine even if we hit the fiscal cliff. We are prepared for tough times; we have no choice. But it\u2019s a terrible thing for the US. So I am saying let\u2019s do what we need to in order to stop this from happening\u2014not because it\u2019s good for JPMorgan but because it\u2019s good for the people of the country.
\nYou also said you formed a fiscal cliff war room.
\nThat was a bit of an overstatement. We do have a little bit of a war room. We did it for the euro zone crisis and we do it for other crises. The war room is every department\u2014legal, credit, risk, compliance, bankers, audit, knowing what they need to do when crisis hits. We are just starting that process for the fiscal cliff. It\u2019s not going to be the same kind of thing because this one is more how it affects the clients. So we have this effort underway, but we don\u2019t have a physical war room.
\nYou are worried about the US and staying put in Spain and Italy for the long term. Does that mean your outlook on Europe is better than on the US?
\nThose statements weren\u2019t an outlook, I was making a statement about our policy. The US, despite the fiscal cliff, is still one of the best economies in the world\u2014and one of the best investment destinations. We shouldn\u2019t create a short-term problem that could be painful for America. It\u2019s a great place to do business. I wasn\u2019t comparing it with Italy and Spain. What I was saying about Italy and Spain is that it\u2019s very easy for people to say, \u201cwell, you are taking too much risk\u201d. If really bad stuff happens we can lose $5 billion and, if that happens, I am going to get a lot of questions from the analysts. But JPMorgan is not, cannot, and will not be a fairweather friend. It\u2019s true for Italy and Spain; it\u2019s true for the US; it\u2019s true for India.
\nWe want to be there in good times and bad. You can\u2019t just kind of run in and out of a country. Our investments are in people, training, systems, relationships and all these take a long time. I was using Italy and Spain as an example… We are doing business there for over 100 years and we are not going to just cut and run. We will manage the risk and do the right thing.
\nWhere will JPMorgan be in India in next five years?
\nI don\u2019t know about the global service centre but the coverage of clients will double. When you are doubling clients, you are doubling capital, doubling all supports like credit, risk, HR (human resources), legal, systems, operations, research. It\u2019s a big effort. If we are covering approximately 130 (companies) today, we will hopefully be covering 250 in five years, and 500 in 12 years. In the US, we cover something like 3,000 corporations and there is a chance\u2014if you want to dream a little bit\u2014that in 30 or 40 years, we will be covering 3,000 corporations in India.
\nIs there anything that worries you in India? The fiscal situation? High inflation?
\nWe have to deal with those anywhere we are. The governments around the world need good policy to drive good growth. Brazil and Singapore have done that. You have seen what bad policies have done to Greece, Cuba and a whole lot of other countries.
\nDoesn\u2019t the fiscal situation in India worry you?
\nNot really. But I think in terms of the business, people here want good policies; they want to be able to grow and to expand. There are more complaints about the bureaucracy here than the fiscal policy. In the US, there are more complaints about the fiscal policy.<\/p>\n","protected":false},"excerpt":{"rendered":"
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