The Straits Times - March 5, 2013
State-owned institution wants more homes for staff as it expands here
WHILE most banks around the world are slashing costs, State Bank of India (SBI) is looking to spend big on Singapore real estate.
The bank wants "at least 10 to 20" more condominium units here to house staff as it ramps up its local presence.
The expansionary move is in stark contrast to other foreign banks, many of which are cutting jobs and curbing incentives like housing allowances for expatriates as they rebuild balance sheets following the global financial crisis.
Those sorts of balance sheet issues do not affect India's largest bank. It came out of the crisis stronger than ever, as investors and consumers flocked to the state-owned financial institution as a safe haven.
"Whenever there's trouble in the markets, our deposit inflow increases all over the world," noted SBI Singapore chief executive and country head Anil Kishora.
So costs are not a major issue for SBI as it shops for property, he said. The bank already owns some homes here and is looking to buy more freehold apartments.
It placed an advertisement in The Business Times in January, saying it was looking to buy units in a wide range of locations, including Farrer Park, Toa Payoh, East Coast and Jurong East, but near good schools and within a 15-minute walk of an MRT station.
The units should also be 1,100 to 1,400 sq ft in size, the ad said.
Although Singapore property prices are still rather high, Mr Kishora said buying, rather than renting, is more cost-effective in the long run.
"The cost base should be declining or at least stable. We have been conscious of increasing property prices, valuations have been going up," he said.
"But we are still confident that in a long-term business perspective, it makes immense business sense for us to buy properties.
"It will stabilise our cost base. In some sense it would insulate us from any future increases in pricing, as we won't be paying any rentals."
The new purchases should reduce the bank's rental costs by 20 to 25 per cent within the next three years, Mr Kishora added.
Buying property also helps to boost productivity, he said.
"Immediately after the expatriate staff come to Singapore, they can get a house and start working. They wouldn't need to hunt for a house and they'll get to live in premium areas."
Mr Aravind Kumar, SBI's executive vice-president of credit syndications and investments, said his life was made much easier by the bank providing housing.
"Honestly, I was travelling out of India for the first time," he said of his move to Singapore in September 2010.
"Someone picked me up at the airport and I was provided accommodation immediately. I didn't have to look around and it was easy for me and my family."
The condominium is so near the office that he sometimes walks home. In the mornings, he often shares a taxi with a colleague and his daughter, who also works in the Central Business District.
The fact that quite a number of SBI staff live within the same area has also helped them to bond, he added.
"We golf, eat together and have potluck dinners. Sometimes we go for outings; we've been to Bintan, Kuala Lumpur and Genting Highlands together with our families."
SBI employs 210 people in Singapore, 41 of whom are non-resident Indians. It has a qualified full banking licence, which allows it to have up to 25 business locations.
It has seven branches and 21 ATMs here. Its retail banking business mainly caters to non-resident Indians and Indian tourists, and for the time being, that is enough for SBI.
"India is a huge retail market for us, and all other banks are trying to enter India too. I don't think we need to explore new markets for the next 10 years or so," Mr Kishora said.
Its corporate banking business is growing rapidly here, he added, as an increasing number of Indian firms are doing business in Singapore.
"Almost all the major Indian corporate players have a subsidiary or an outfit here, so if I want to talk to let's say, Tata, many of their companies are next door and their senior-level people are here," Mr Kishora said.
"Traditionally, Indian companies would operate out of other centres, such as the UK, the US and to some extent Hong Kong, but now most of them prefer to do business out of Singapore."
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