It ran on these lines: if you are no good, you get a chance to better yourself. At the end of it all, if you still haven’t moved beyond the “if” stage, well, then you better get out of the kitchen. That is Axis Bank: BW-PwC’s Fastest Growing Large bank. A year after moving into the corner room, Sharma has done some plain-speaking. Small things say a lot. Her predecessor, P.J. Nayak (he was chairman and CEO) always made sure that annual reports had a theme; and he would hold forth on it in his message. In the year he left, it was ‘Giving back’ (on how the bank is more than a bank; that it has a heart called the Axis Foundation). The year before, it was ‘Rebranding the bank’ (to Axis Bank from UTI Bank). In contrast, the tone of Sharma’s first ever message as managing director & CEO in the 2009-10 annual report is clinical, no flourish. It is all about “what we are as a bank, where we are and what we should aspire to”. Sharma has shaken up Axis Bank. Earlier, the two leading institution-spawned new private banks, ICICI Bank and HDFC Bank, stood out; they stood for something. What was Axis Bank all about? Make no mistake, it has always been a good bank, clean as a whistle. But in a highly commoditised financial market, the bank was just another number; not at No. 1, 2 or 3 at anything. It all came to a head when the issue of a successor to Nayak came up. The head-hunting led to Sharma; Nayak opposed it. The board batted for Sharma; Nayak quit. Clearly, the board felt that a bit of old-fashioned caning was needed to get the bank going. Sharma has done just that. Today, Axis Bank is seen as a rival to HDFC Bank. Vikas Khemani, who heads institutional equities at Edelweiss Securities, points out that in terms of return on assets, Axis Bank is closing the gap — for the period end-March 2010, it was at 1.58 per cent; HDFC Bank’s was at 1.60 per cent. Or look at the recent Enam deal in which some businesses of the investment bank (i-bank) was snapped up by Axis Bank. Giving out loans is the low hanging fruit; just about every other lender in town can do it; and in an age of financial disintermediation, banks are not the only lenders in town. A firm can seek out any bank for a loan, bargain on price, or issue debentures. It is a pure-play interest income game. But if you add an i-bank under your wings, you move up the ladder, play the knowledge game, and get fat fees for it. Enam was all of the latter, but realised that it needed to have a balance sheet, capital and reach. Sharma knew both sides of the game — pure commercial and the i-bank part. She was involved in the setting up of ICICI Securities (I-Sec) in 1992, a joint venture between ICICI and JP Morgan. She moved to I-Sec in 1995, was later deputed to JP Morgan, and returned home in 1997. It made sense to bag Enam and get Vallabh Bhansali on Axis Bank’s board. In another four months, Sharma would have completed two years in her job. She had to win the confidence of her senior colleagues; she had after all come in under not-so-friendly conditions. That part’s done; she has energised the bank, and the biggest achievement — grown it at a time when the prevailing wisdom is to take it a bit easy. That’s not bad for someone whom critics said had no track record as a banker. The truth is, there are scores of banks that are not headed by the typical commercial banker — Pramit Jhaveri at Citi, Kaku Nakhate at BankAm-Merrrill Lynch or Neeraj Swaroop at Standard Chartered Bank (he started life at Ponds, ran retail at BankAm and HDFC Bank, and now is boss at a bank that predominantly does corporate banking assets). Even Aditya Puri was a wholesale banker in his days at Citi; he has crafted what is arguably India’s best retail bank. Sharma has proved that the old matrix holds no good; a new one is needed if you want to go into a new and higher orbit. raghu dot mohan at abp dot in (This story was published in Businessworld Issue Dated 03-01-2011)
