London, Feb 25: State Bank of India (SBI) is set for a major restructuring of its business in the UK from April, India s largest state-owned bank has said.
SBI's UK operations will transform into a subsidiary named State Bank of India UK Limited from April 1, in compliance with wider ring-fencing of capital requirements by the Bank of England.
The move will mean that all retail branches of SBI in the UK will fall under a new UK-incorporated banking entity instead of their previous status as overseas branches of the Indian entity.
"While there will be no visible change, the brand changes to State Bank of India UK Limited. The 12 retail branches that we have seven in London and the rest outside London will become branches of SBI UK Ltd. Apart from that, if we look at the day to day, there will be no dislocation," said Sanjiv Chadha, SBI s Regional Head for UK.
He explains that while customers would be able to carry on using their debit cards and other banking facilities as before, the move marks a strategic shift for the bank with a greater focus on the UK market.
"We will be looking to doing more business in the UK, expanding the products that are designed for the UK market," he said.
The move follows Bank of England's Prudential Regulation Authority (PRA) directing foreign banks a few years ago to move from their retail status as overseas branches to independent entities in order to protect depositors in the UK from fluctuations in foreign markets.
"As a subsidiary, the capital will be ring-fenced and that brings an additional comfort level," said Chadha.
He highlighted that the restructuring marked a major endorsement for London as a financial capital of the world, despite uncertainties triggered by the 2016 referendum in favour of an exit from the European Union (EU).
"The UK market is one of tremendous interest and promise to us and that is unchanged regardless of Brexit. London is the best place for us to base our international business in, we find the regulatory climate proportionate and supportive," he added.
SBI's expansion in the UK market was welcomed as a vote of confidence by the City of London Corporation, which has a remit to support and promote the British capital as a world-leading financial and business hub.
"The move is a reflection of the continued strength of UK-India ties, particularly in financial services. SBI has long been a treasured partner of the City, opening an office here back in 1921. As the City of London looks towards its next decade of engagement with Asia, we also look forward to building on our 100-year relationship with India s largest bank," said Catherine McGuinness, Policy Chairman at the City of London Corporation.
SBI operates seven branches in London and five each in Manchester, Birmingham, Wolverhampton, Leicester and Coventry all cities with a large concentration of Indian diaspora population.
The bank says that while the Indian-origin customer base will remain at the heart of its operations, it will use its expansion to cater to the wider UK market as a competitive local bank.
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