DEUTSCHE BANK and its

success factors in the context

of Regulation & 4Ps of
Marketing.



SSSIHL,
BRINDAVAN
CAMPUS

| Vishwas B , Roll No:13214





Introduction
The story of foreign banks in India goes back to the 19th century when the colonial economy
brought with it the need for modern banking services, uniform currency and remittances by
British army personnel and civil servants. The banking institutions were established mainly
because of the growing need for banking services by the merchants who came from the west.
The three presidency banks established by the East India Company would later merge to form
the State Bank of India, Indias largest lender. British owned and controlled, these early banks
are considered Indias first foreign banks.
The first phase of banking reforms, triggered by recommendations of the Narasimhan
Committee in 1991 and the licensing of the new private sector banks through the next two
decades inaugurated an era of change. Meanwhile, the opening-up of the economy to
increased participation by foreign players created greater opportunities for foreign banks to
work with their multinational clients in India.

Foreign banks in India in 2013: A snapshot
As of March 2013, there are 43 foreign banks from 26 countries operating as branches and 46
banks from 22 countries operating as representative offices. A number of foreign banks have
also entered India via the NBFC route, while a considerable number have set up captive centres
in the country.
Foreign banks present in India as representative offices often have correspondent banking
relationships with domestic banks and provide a useful platform for foreign banks to access
opportunities for foreign currency lending to Indian corporate and financial institutions.

The efficiency levels of the foreign banks are generally better than that of the other banks
operating in the country and have lower NPAs , but, because they cater to the same kind of
corporate clients, their risks are correlated and in turn higher .Their Strict Lending norms and
policies allow only a few corporate clients to pass their criteria, so naturally they are
considered niche segment in India.








Foreign banks: Evolution and approaches to banking in India
Due to the local branch regime and the operating model of choice, foreign banks have, for the
large part, remained niche players, focusing on trade finance, external commercial borrowing,
wholesale lending, investment banking and treasury activities. Some large foreign banks have
focused on capturing the retail market but have remained confined to the high end of private
banking and wealth management, while a few others have created valuable niche offerings in
the areas of transaction banking, cash management and remittance products.

REGULATORY FRAMEWORK

Foreign banks that look to do business in India has to face challenges that are unique and
specific to each of the foreign banks in India. For any bank looking to start operations in India
foreign or domestic compliance with stringent RBI regulations is a major challenge.

No differential licensing

Foreign Banks that look to offer unique products and services looking for differential licensing
are forced to apply for universal banking only that mandates all the banks to offer full fledged
banking services in the country.

Financial inclusion
Complying with the RBIs guidelines on financial inclusion requires offering banking products
and services to unbanked and under banked areas and customers. This involves costs that
foreign banks with few branches and fewer sources of raising low-cost funds may find difficult
to implement. It means operating in areas that these foreign banks does not have expertise in,
which leads to more NPAs.
Priority sector lending
Foreign Banks are required to lend to Priority sector which is 32% of the Adjusted Net bank credit for
banks having lesser than 20 branches , this figure stands at 40% for banks that have more than
20 branches in India. As already mentioned these foreign banks dont have the expertise in
lending to the priority sector in India. As some in the banking industry said, referring to this
predicament of the foreign banks They know nothing about the price of ploughs. A rule of
thumb is that priority lending cuts bank profits by a fifth. Foreign banks have just 21 ATMs in
rural India compared to 41 foreign banks operating in India with 323 branches and 1414 ATMs.







Setting up a wholly owned banking subsidiary (WOS)
Foreign banks in India operated as branches of the parent bank located overseas. However RBI
had released guidelines for setting up wholly owned subsidiaries (WOS) by foreign banks in
India. A WOS would have to be in the form of a locally incorporated entity. These new guide-
lines will result in banks losing the advantages of a branch structure.


ABOUT DEUTSCHE BANK

Deutsche Bank started operations in India in 1980.It is know for strong client relationships,
highly specialized product technology and global connectivity, all built around strong corporate
governance standards.
Deutsche has established strong relationships with its clients in India in the last 30 years. It has
17 branches across the country in Mumbai, New Delhi, Bangalore, Chennai, Kolkata, Noida,
Aurangabad, Gurgaon, Kolhapur, Pune, Salem, Vellore, Moradabad, Ludhiana and Ahmedabad,
as well as Global Service Delivery Centres in three locations.
Its strength lies in areas such as Debt and Derivatives ;Global Transaction Banking cash
management, trade finance and custody; Investment Banking ,Institutional Equity broking,
asset and private wealth management, retail banking and BPO.

THE 4Ps

PRODUCTS
Corporate Banking and Securities

This includes sales and trading of securities, foreign exchange and derivatives dealing,
corporate advisory, M&A.

Under the Foreign Exchange and derivatives segment it deals in onshore swaps, interbank
interest rate and overnight index swaps, Government Bond Trading it is one of the very few
banks in the country offering such a distinguished suite of services.

In the Corporate banking side it has overlooked various IPOs and M&A transactions.
It offers various cash management services leveraging on its well developed technology,
offering Trade finance products such as account payables, receivables and liquidity
management. It has a group offering dedicated services in trade financing and risk advising.



Private & Business Clients

It offers Current account, loans, deposits and investment
advisory services to Individuals as well as small and
medium corporate clients. It has around 150000 retail
customers in India and it offers its services across its 16
branches in the country.
Asset and Wealth Management
It is one of the countrys leading wealth management
companies. Its main focus in this segment is to offer
innovative financial planning and investment products and
services to the High Net Worth individuals in the Country.

PLACE

Deutsche Bank has 17 branches in India located at Mumbai, New Delhi, Bangalore, Chennai,
Kolkata, Gurgaon, Noida, Aurangabad, Kolhapur, Pune, Salem, Vellore, Moradabad, Ludhiana



and Ahmedabad. it also has its Global Service Delivery Centres in three locations. One of its
core competencies comes from its global expertise, technology driven operations and its local
tie-ups. It has several service centres in India, GBS service centres which was set up in 2006 by

DBOI Global services which is subsidiary of the Deutsche Group Company to leverage on Indias
operating infrastructure and Qualified and talented Workforce to support its global operations
across various areas of Services and products the bank offers. These service centres are
strategically located in India at Jaipur, Bangalore and Mumbai.


PROMOTION

It has placed itself as an innovative, performance oriented, leading global financial services
provider in the world. Its mission statement says We compete to be the leading global
provider of financial solutions, creating lasting value for our clients, our shareholders, our
people and the communities in which we operate.
One of their main links to the customers is Relationship managers; Productivity of these
relationship managers is their biggest focal point. Customers especially the HNIs which the


Figure 1: Deutsche Bank's segment wise revenue
Share.



bank focuses on are least worried about the number of branches the bank has in the country
they look for Brand Image and Investment Expertise and services and Deutsche Bank stands for
that.
To ensure that customers remain loyal to the bank, they encourage customers to look for value
additions to the products and services that they provide. Their managers make a point to visit
any clients where they are unhappy with their service or where they have lost money; this in
turn gets a lot of referrals to the bank and in a market where its clients are mostly HNIs even 1
referral by a client makes a big difference.

PRICING
Deutsche bank offers products at a premium, it has positioned itself as a premium brand
offering highly sophisticated, technology driven, performance driven products. One of its
unique selling points is its Value added services. It encourages its customers to go for banks
which is highly efficient and has high level of expertise in the field rather than looking for the
strength of no of branches in the country alone.

DEUTSCHE BANKs STRATEGY AND WHERE THE OTHER BANKS ARE LAGGING BEHIND

Deutsche Banks profit at its Indian operations increased 25% to Rs. 1,033 crores in fiscal 2012-
13 led by a 78% rise in advances to Rs. 22,374 crores from Rs. 12,549 crores in 2011-12.
The bank focused on high-yielding assets and shed those offering lower yields.
Deutsche Bank also announced that its retail banking division had turned profitable seven years
after it started giving loans to individuals in India in 2005-06. The key to success has been focus

on core businesses, stress on quality and customer satisfaction while maintaining strict cost
discipline. In 2011 it sold its credit card business worth 224 crores to IndusInd Bank Ltd,
together with the platform, technology and the talent. Thereby it reduced its retailbook in India
except in areas such as Individual bank accounts, personal and Home loans, with more focus on
its core businesses.
One of the heads of the Bank said that the sale helped the German lender concentrate its retail
banking business around deposits, wealth management, and secured lending.
It was in 2008 after the financial crisis hit many of the customers of foreign banks started
defaulting on their loans or credit card payments Citibank, HSBC and Standard Chartered -
which together account for over 60 per cent of total foreign banking assets in India - suffered
significant losses in their consumer finance portfolio. This was mainly because of foreign banks
aggressive lending to the retail sector it was in this context that Deutsche bank sold its credit
card business. Foreign banks especially the big four Citi bank, HSBC, Stanchart and Deutsche.
Whereas the former three reduced their total assets, Deutsche banks Increased Its total assets
by lending to its core areas like wholesale banking and other operations, it improved its
operating profits from 1506cr to 1821cr whereas Citibank and HSBC declined with Stanchart




making a marginal improvement over its previous year . It also brought in additional
Investments to India to the tune of 455 crores in 2012.
Conclusion:
Deutsche banks CEO Ravneet Gill says that Deutsche Banks robust growth in profits in a
challenging business environment reflects its judicious allocation of resources, deep client
relationships and well diversified businesses. The success of deutsche bank is mainly due to its
focus on the core products and leveraging on its core competencies and reducing exposure to
businesses where its competency does not lie. It should continue to make profits as long as it
sticks to its current strategy.
REFERENCES:

Foreign banks in India At an inflection (Manoj K Kashyap and Shinjini Kumar ,Price Water Coopers)
Deutsche Bank India Country Fact Sheet (db.com/India)
Interview-CEO Deutsche Bank, India - Asian Wealth Management and Asian Private Banking
Hubbis.
Different Branches, New Regime Livemint.com
Deutsche Bank: Winning in a changed environment: Investor day Presentation ,db.com
Foreign banks in India Into another country ,The Economist
Deutsche Bank infuses Rs 455 cr to grow Indian business , Live mint
IndusInd Bank snaps up Deutsche Bank credit card biz ,Business Line
IndusInd to buy Deutsche Bank's credit card biz , Business Standard News
Foreign banks curb retail lending, shift focus to institutional business, Business Today
India continues to offer vast opportunities to foreign banks , Business Today
Mid-sized foreign banks struggle to turn retail operations in India profitable , Business Standard
News
What ails foreign banks in India, Livemint.