A Ten For The Winners!
What is the mystical quality of the number ten? It is the number of heaven and the world, and universal creation. It is the very first number that needs a separate part. The Pythagoreans were of the view it was the holiest of numbers; and when they took oath, they did so on the triangle — as in the first letter in the Greek word “deca” (ten) is in the shape of one. In a deck of Tarot cards, the tenth is symbolised by the Wheel of Fortune — to mean the end of one and start of new. We at BW Businessworld believe that our Best Banks’ Survey (2016) with PwC’s knowledge support which is into its 10th edition is also on a cusp.
When we started off on this journey a decade ago, we were clear that numbers alone will not be its driver, premised solely on PwC’s methodology. Rigorous at it was, it was felt by senior editorial hands that it was important to look deeper — why the numbers were the way they were; that it can’t be based on a cricket-score card approach without taking into account the quality of the opposition or pitch conditions. It was therefore decided that financials will be subjected to scrutiny by an external jury that weighed the variables — uniformity of credit and deposit growth, market perception, management and corporate governance, the base-effect of size on growth parameters, growth versus risk, and efficiency in the use of capital.
The jurors for the 10th edition of the Survey were Sir Richard Stagg, Chairman, Rothschild (India); Sunil Sanghai, Founder & CEO, Nova Dhruva; V. S. Parthasarathy, Group Chief Financial Officer & CIO, Mahindra & Mahindra; Rahul Bhasin, Founder & Managing Partner, Baring Private Equity Partners (India); Madan Sabnavis, Chief Economist, Care Ratings; Nikhil Shah, Managing Director, Alvarez & Marsal; and Tarun Bhatia, Managing Director, Kroll (India).
It was observed that winners were coming from a very small pool of banks. Of the eight awards up for judgement, over the last few years we have seen banks which have won multiple awards — both in the best and fastest growing categories. Come rain or shine, a handful always make it to the podium. This is not a good sign. Collectively, these winners account for no more than a quarter of the systems assets, but in market capitalisation they corner the lion’s share. As capital quotes increasingly at a premium, many down the line will have no space at all. Should we then rejig the categories, perhaps treat state-run banks as a separate class as we do for foreign banks? (Incidentally, no award was given for the fastest growing among foreign banks as none were in the balance-sheet growth game). There are no clear answers as any such move brings its own headaches — in the marketplace, performance is what counts at the end of the day.
The coming editions of the Survey may need the inclusion of newer players — payment banks and the newly minted small finance banks. And when differentiated licenses are finally issued, this lot too. All of this is indicative of how far we have travelled over the last decade. Disintermediation of a new kind is set to rear its head; and with it our Survey too will reflect the changes in the topography. But that’s for the future.
For now, at the end of latest exercise, the banks that made the cut were HDFC Bank for which winning (and growth) has become a way of life — it walked away with the awards for the ‘Best Large Bank’, ‘Fastest Growing Large Bank’; and its managing director, Aditya Puri, the ‘Lifetime Achievement Award’ for banking. Kotak Mahindra Bank won in the ‘Best Mid-sized Bank’. ‘Best Small-sized Bank’ award was shared jointly by RBL Bank and City Union Bank. The ‘Best Foreign Bank’ was Bank of America-Merrill Lynch. In the ‘Fastest Growing Mid-size Bank’ category, IndusInd Bank walked away with the prize, with ‘Fastest Growing Small Bank’ being bagged by RBL Bank.
Happy reading!
