Thierry Porté, president and CEO of Shinsei Bank, is on a whirlwind tour of India to understand the market. After New York-based Ripplewood Holdings LLC took over Tokyo's venerable Long-Term Credit Bank in 2000 and rechristened it as Shinsei Bank, Japanese traditionalists predicted the worst.
Well, Shinsei Bank has become the country's most profitable bank since. And Indian IT players get some of the credit. The bank, once a lender with $17.5 billion in bad debts and an antiquated IT system, is now a bank that defies some of the most vocal doomsayers. Here, Porté tells the story
What brings you to India?
Primarily, our association with Indian IT players like Nucleus Software which have played a distinguished role in Shinsei's march to the top. The bank's increased efficiency levels have a lot to do with the way its software was managed.
Moving the bank's operations from a mainframe to a PC-based network was the key that cut our operational costs to one tenth of the original. All of this worked well for us.
Our software partners from India have created a safe, scalable and low-cost IT platform for various banking transactions. It's very important for us to keep in touch with them, and also keep ourselves open to the growing needs of markets like India.
Can you summarise India's participation in your success?
We get an enormous low cost advantage from our Indian partners. The ratio is 1:10, which means we cut our costs to one tenth of what it would cost us in Japan. When we started the so-called outsourcing of our banking services, everybody in Japan thought that this would be a gross failure. We made it possible.
Today, several Japanese companies have made inroads in India and helped build a more flexible working community. Japanese companies come with their own quirks and way of doing things, and we're still in that stage where we let somebody else go out and take the first risk. Others simply follow.
The success of Indian professionals in rehabilitating Shinsei Bank has become the talk of the banking and IT community in Japan and is well documented.
What have been the most important lessons for Shinsei as a lending institution?
Shinsei Bank today is churning out green because it has consciously created a different kind of bank. Some 40 per cent of our profits come from fee-based services such as investment banking and securitisation of debt, instead of the low-margin corporate lending that dominated our predecessor's business.
With new IT paltforms in place, it gives Shinsei the flexibility to roll out 24-hour ATMs, internet banking, and call centres operating round the clock, none of which LTCB offered.
How significant is India as an investment market for Shinsei Bank?
We are gunning for more share in investment banking and increased levels of securitisation through our partners. India, at present, is a small contributor to the balance sheet of Shinsei Bank since we have a much larger Japanese market to look after. But given India's growing financial potential, the country would remain a lucrative market for us, even if in a small way.