Chase Manhattan Bank is teaming up with a bank in India to develop local-currency cash management, financial advisory, and other wholesale banking activities in that nation.
The alliance with the Housing Development Finance Corporation Bank was unveiled this week. Chase also said it is acquiring a 15% stake in the bank from National Westminster Bank PLC.
"We need a local partner, and we see this as an opportunity to build up our local capabilities without having to go through all the brick and mortar," said Robert E. Fallon, a Chase managing director and head of its Asia-Pacific division.
The decision to expand in India contrasts sharply with a decision late last year by BankAmerica Corp. to divest its retail banking operations in India. BankAmerica said it was not big enough in India to compete effectively.
With the exception of Citicorp, which handles both retail and corporate banking in India, other U.S. banking companies active in the country have concentrated on selected businesses, such as correspondent banking and securities processing. Bank of New York Co. and First Union Corp. are among those with offices in Bombay.
Housing Development Finance Corporation Bank, a unit of one of India's largest housing finance companies, handles retail, commercial, and investment banking.
Chase is buying the 15% stake through its private equity investment unit, Chase Capital Partners. Terms were not disclosed.
As part of the transaction, Chase agreed to help the Indian bank extend its reach through Chase's global banking network.
"The strategic tie-up with HDFC Bank is a significant reflection of the international bank's increasing interest in and long-term commitment to the Indian economy," Chase said.
Chase, which entered the Indian market in 1930, has a branch in Bombay.
"India is an integral part of our strategy for developing business in the Asia-Pacific region," Mr. Fallon said.
By linking up with a local institution, he said, Chase will be in a far better position to develop the businesses it has chosen to emphasize. These include risk management, financial advisory, cross-border fund-raising, securities custody, and treasury services.
Chase also hopes to bid for more advisory mandates on government privatizations. It is now doing advisory work for the state of Orissa on the sale of its electricity distribution corporation.