The Tribune, Chandigarh, India

After Vikram Pandit, Citigroup is ‘going to get a lot smaller’

New York City, October 17
The incredible shrinking bank may have to shrink more. In the hours after Tuesday's surprise announcement that Citigroup CEO Vikram Pandit was stepping down, speculation was rife, and facts scant, about what lay ahead for the third-largest US bank. But one possibility given high odds by financial analysts: More cost-cutting, more shrinking and more focus on boring, traditional banking, like making loans.

"It's going to get a lot smaller," said Gerard Cassidy, a long-time banking analyst at RBC Capital Markets. "You've got to shrink to make big money."

In the nearly five years since Pandit took over as CEO, he shed businesses and cut jobs. Staff fell from 375,000 when he took over to 262,000.

Once the largest US bank, Citi is now the third-largest, with $1.9 trillion in assets. It trails JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.

Citi's new CEO is Michael Corbat, 52. He had been the CEO of Citigroup's Europe, Middle East and Africa division. He also ran Citi Holdings, which contains assets that Citi wants to sell.

Because Corbat isn't widely known, analysts Tuesday were not sure how he might change the direction of the company.

For clues, some are looking to someone more well-known: the man thought to be behind Pandit's departure, Citi Chairman Michael O'Neill. O'Neill became chairman in March, when Richard Parsons left after three years.

O'Neill was elected CEO of Barclays, the British bank, in 1999 but had to give up the job immediately because of heart problems. He joined Citi's board in March 2009. O'Neill had also been CEO of Bank of Hawaii Corp., where he was a big cost-cutter.

"When he ran Bank of Hawaii, he shut down up to 50 per cent of its branches. It's a startling number,'' said Cassidy. He added that at Citi, "if the branch banking businesses doesn't make sense in parts of the United States, (he'll) get rid of it.''

Tom Brown, founder of hedge fund Second Curve Capital, agreed. "O'Neill downsized tremendously, and that's what I think you'll see here,'' he said.

For years, the goal in banking was to get bigger, spreading expenses over more and more customers and offering a smorgasbord of services. This was the vision of Sandy Weill, the former Citigroup CEO who built the bank through several deals. — AP

‘Pandit forced out due to differences’

Citigroup’s India-born chief Vikram Pandit, who has made a sudden exit, was forced to leave the banking behemoth following differences with the board over strategy and overall business performance, media reports said. Pandit, who steered the crisis-hit Citigroup into profitability, resigned abruptly on Tuesday — a development that took Wall Street by surprise. According to media reports, Pandit’s exit came in the wake of differences with the board. “Pandit’s resignation came after a series of missteps this year left some directors feeling that the company wasn’t being managed effectively and that the board wasn’t kept adequately informed,” the Wall Street Journal said quoting sources. In a similar tone, the Financial Times said that Pandit left Citigroup after a clash with the board over a series of recent missteps by the bank. — PTI

Telecom panel for refarming of entire 900 Mhz spectrum
Tribune News Service

New Delhi, October 17
The telecom commission, highest decision making body in the telecom sector, today decided that the entire spectrum in 900 Mhz band will be refarmed to 1800 Mhz band at the time of the renewal of operators’ licences.

This suggests cellular operators, including Bharti Airtel, Vodafone, Idea Cellular and state-owned Bharat Sanchar Nigam Ltd and MTNL, would have to pay more than Rs 1,15,000 crore in order to change frequency band width from 900 Mhz to 1800 Mhz band.

The Empowered Group of Ministers (EGoM) will meet on Thursday to take a final call on the panel’s decision.

According to an analysis carried out by the Cellular Operators Association of India (COAI), the move will also have an adverse impact on the subscribers who might end up paying an additional over 60 paise per minute while making calls.

After the panel’s meeting, telecom secretary R. Chandrashekhar said: “We have recommended that full refarming of the entire 900 MHz band of spectrum should be adopted. We’ll refer this to the EGoM at whose meeting the issue will be discussed. The group will take the final decision on this.”

The panel discussed three alternative proposals at the meeting. One was of retaining up to 5MHz of spectrum, the second retaining up to 2.5 Mhz and the third, which has been accepted, was to reframe the entire spectrum band.

COAI director general Rajan Matthews said: “If the final decision remains the same, we’ll have no option but to challenge it in TDSAT. We’ll be constrained to pass on the additional burden to customers by substantially hiking cellular tariffs”.

According to Matthew, nowhere in the world over 450 million customers have been migrated from one spectrum band to another. Not only could this lead to serious black out of services but it would have a serious impact on the sector itself. There would be huge adverse impact on company’s bottomlines, he added.

An independent study on the spectrum refarming conducted by Analysys Mason pointed out operators with 900MHz band would need to replace 286,590 base stations and install an additional 171,954 base stations to provide equivalent coverage on 1800 MHz. Such a replacement of base stations and deployment of additional sites would result in an incremental capex of Rs 54,739 crore, and incremental annual opex of Rs 11,762 crore.

The decision will take the industry back to the days of unreasonably high tariffs and it is saddening to know that the Telecom Commission has not given due consideration to its adverse impact on subscribers, COAI said.

In 2010 TRAI had recommended refarming of the 900 MHz band as globally it was being used for 3G services and was a valuable band that should not be used uneconomically to give 2G services. The cabinet has already permitted refarming as part of the new telecom policy.

M&M joins premium SUV pack, Tata Motors eyes no. 2 slot
Ssangyong enters India with Rexton rollout

M&M president (automotive & farm equipment sectors) Pawan Goenka (L) and Ssangyong Motor CEO Yoo-Il Lee, pose with the newly-launched Ssangyong Rexton SUV vehicle in Mumbai on Wednesday. — Reuters photo

Mumbai, October 17
South Korean carmaker Ssangyong Motor Co Ltd wants to make India its second largest export market, by taking advantage of parent company Mahindra and Mahindra Ltd's dominance of the country's booming SUV sector.

India is an untapped market for Ssangyong, which counts Europe and Latin America as its two largest export destinations. The carmaker shipped two-thirds of its production in the last financial year, and is targeting emerging economies such as Russia and South Africa as well as India for its luxury SUVs.

"This is the best possible market for Ssangyong," said Yoo-Il Lee, Ssangyong's chief executive officer. "I am very confident that India will become Ssangyong's second-largest export market," he added, without providing details. The firm does not give a breakdown of its export markets by sales.

Ssangyong, which launched its first vehicle in the Indian market on Wednesday, will build the Rexton at Mahindra's factory in Poona, avoiding costly import tariffs.

Ssangyong will sell its vehicles alongside Mahindra SUVs in the Indian carmaker's showrooms, but as the South Korean models are more expensive than the India ones, will not compete against them for market share.

Mahindra dominates India's increasingly crowded SUV market, where it sold four times as many of the vehicles than its nearest rival, Tata Motors Ltd , in the last fiscal year that ended in March.

Ssangyong is pushing into a sector where global motor firms are busily expanding. Ford said in January it would spend $142 million upgrading its Indian plant to build the EcoSport SUV. — Reuters

SBI halves processing charges on home, auto loans

New Delhi, October 17
State Bank of India on Wednesday reduced the processing fee on home and auto loans by 50 per cent to cash in on festive season demand. This offer is applicable on loans availed from October 17 to December 31, SBI said in a statement. "With this reduction, the bank is quoting the lowest processing fee on both home and auto loans to our esteemed customers," it said.

For home loans up to Rs 25 lakh, the processing charge has become 0.125% of the loan amount from 0.25%, it said. In case of loans between Rs 25 lakh and Rs 75 lakh, the processing fee would be Rs 3,250 as against Rs 6,500 while loans above Rs 75 lakh, it would be flat Rs 5,000 as compared to Rs 10,000 per application earlier.

With regard to auto loans, the processing charge has been slashed to 0.255% of the loan amount as against 0.51%.

Last month, SBI reduced its base rate or minimum lending rate by 0.25% to 9.75 % following RBI's monetary policy action. The decision by the country's largest lender come a day after the RBI reduced CRR by 0.25% to 4.5%. SBI now offers loans up to Rs 30 lakh at 10 per cent and loans above Rs 30 lakh at 10.15%.

On Tuesday another state-owned bank, Punjab & Sind Bank, had also announced festival bonanza scheme for home and auto loans. The bank said the scheme is applicable to fresh and takeover cases of such loans in the period beginning October 15.

There is no maximum ceiling on the amount of loan and number of vehicles to be financed by the bank. It further said that no processing fee is levied on these loans. — PTI

Jewellers set to launch marketing blitz for sale of gold coins
Shiv Kumar/TNS

Mumbai, October 17
With gold prices retreating from their yearly high, jewellers are getting aggressive about pushing jewellery and coin sales in the coming festive season. Banks, modern jewellers and even some unorthodox players like the postal department are offering many schemes to lure customers. Tribhovandas Bhimji Zaveri has come up with the Kalpavruksha scheme whereby buyers can opt to pay for jewellery in instalments.

Despite the RBI expressing displeasure at banks selling gold coins, major banks are still aggressively selling it to earn good margins on it. HDFC Bank on its website has listed a wide variety of gold pendants and coins.

"With monsoons picking up, we expect demand for gold to improve in both urban and rural areas," says Suresh Hundia of the Bombay Bullion Association.

Smaller jewellers are expect to revive festival offers of earlier years when they waived off "making charges" in order to boost sales.

The World Gold Council has tied up with India Post to sell gold coins. It has announced a special 7% discount on purchase of gold coins during the festive season.

New Safari Storme launched at Rs 9.95 lakh
TNS & Agencies

Gurgaon, October 17
After the launch of a Manza variant on Tuesday, Tata Motors on Wednesday launched the new sports utility vehicle Tata Safari Storme at a starting price of Rs 9.95 lakh (ex-showroom Delhi).

Pointing out the company was the first to introduce SUVs in India, Tata Motors MD Karl Slym said it had made an effort to create an SUV for today’s motorists who desire a combination of versatility and luxury in their vehicle.

Aspiring to wrest the no. 2 lot in the country's passenger vehicle market, Tata Motors said it would launch 6 new products in the next one year.

While the base model 4X2 LX is available at Rs 9.95 lakh, 4X2 EX comes for Rs 10.77 lakh, 4X2 VX for Rs 12.37 lakh and 4x4 VX for Rs 13.66 lakh. Tata Safari Storme was first unveiled at the 2012 Delhi Auto Expo.

With underpinnings and engine from the Aria, the new Tata Safari Storme will kick up a storm in the entry level SUV market in India. The new Safari Storme is a more modern vehicle than its predecessor.

Its Aria-derived chassis and suspension and 2.2-litre DiCOR engine will ensure better drive dynamics and better refinement and response respectively. The engine churns out 140PS of power and 320Nm of torque.

Corporate Briefs
Metro Cash & Carry in Zirakpur

Metro Cash & Carry opened its third store in Punjab in Zirakpur on Wednesday. The wholesale distribution centre was inaugurated by Punjab Chief Minister Parkash Singh Badal. Metro Cash & Carry MD Rajeev Bakshi said the company now has 12 distribution centres in India.

Acer to set up new sale points

Acer India plans to set up Acer Galleries in category C towns, Acer Malls and Acer Points in the metros and large cities, and Service Lounges in IT hubs. Acer India MD Harish Kohli said the company will set up 1,000 Acer Galleries, 450 Acer Malls and Acer Points and six lounges by the yearend.

Indian Oil pact with Korea Gas

New Delhi, October 17
Indian Oil Corp has signed an MoU with Korea Gas Corp (Kogas) to jointly explore for oil and gas opportunities including LNG. "IOC and Kogas signed an MoU for joint participation in exploration and production of gas and oil at the global level and developing natural gas infrastructure projects and LNG sourcing," IOC said Wednesday.

IOC chairman R.S. Butola met members of the Kogas delegation and underlined the need to carry the MoU forward and make progress on areas identified for cooperation in a time bound manner. — TNS