Intesa Sanpaolo SpA, Italy’s largest bank by market value, plans to double lending in India within five years of receiving a license to open a branch in the South Asian nation, as the European debt crisis worsens.
“While the market situation in Europe continues to present challenges, the bank is focusing in the immediate term on international expansion in Asia Pacific, along with the Middle East and Latin America,” said Simon Dodd, the bank’s Hong Kong-based Asia-Pacific general manager, in an interview today. “The India plan is to double lending over three to five years following the granting of the license.”
The Turin, Italy-based bank’s euro-denominated loans in Europe dropped 14 percent from last year to $9.2 billion this year, according to data compiled by Bloomberg. The bank plans to expand its market share in U.S. dollar loans, as well as begin local-currency lending to international and Indian companies in areas including acquisition and trade finance, according to Dodd. “The move is part of the bank’s efforts to support Italian businesses internationally,” said Dodd.
Intesa is applying for a branch license “in the next few months” and wants to start operating in 2012, Dodd said.
The bank’s lending in India exceeds $2 billion and includes loans to infrastructure, energy, telecommunications, power, shipping and industrial companies, Dodd said. The bank lost market share in foreign currency-denominated loans in India this year, falling to No. 37 from No. 27 in 2010, Bloomberg data show.
In Asia, Intesa has branches in Hong Kong, Shanghai, Singapore and Tokyo, and four representative offices including one in Mumbai, according to a Dec. 8 presentation on its website. The bank’s international division reported net income of 130 million euros ($169.5 million) for the three-months to Sept. 30, compared with 527 million euros for the bank as a whole, according to a Nov. 8 regulatory filing.
Intesa will extend service to mid-sized companies after receiving the license, while maintaining its focus on large companies in India, Dodd said.
The bank’s so-called core Tier 1 capital ratio is 10.2 percent, Dodd said. The number measures a financial institution’s common equity against its assets, adjusted for the risk of losses. A higher ratio indicates a stronger financial position. European regulators are trying to have lenders achieve a ratio of at least 9 percent.