MUMBAI: Axis Banks dominant position in the domestic debt capital market (DCM) for more than a decade is on a shaky ground as risk aversion forces it to shun deals.
Tighter underwriting standards adopted by the new management under CEO Amitabh Chaudhry may lead to a loss of market share for the private sector lender as clients needing the protection of a bank written check book could move to other competitors, money market participants said. This may also open the door for others to climb the league table, they added.
Axis has been occupying the top slot in the Bloomberg India bonds league table since 2007. So far in 2019 the bank has helped borrowers to sell bonds through 160 issuances totalling close to Rs 70,000 crore of debt, data from Bloomberg shows.
Since taking over as CEO in January Chaudhry has brought in new people and introduced conservatism in business, shunning excessive risk taking and focussing on cross selling. Last week former Nomura executive Neeraj Gambhir joined the bank to take over its capital market and money market business.
“Axis success in the DCM business was built on the banks ability to underwrite. With that not being there its a different ball game. It means that the race to the top is now an open one,” said a top banker with a rival bank.
Income earned from selling bonds in itself is not particularly substantial. In the quarter ended March 2019, Axis earned Rs 84 crore as DCM fees which a minuscule 3% of the Rs 3020 crore earned by the bank.
Deepak Maheshwari, chief credit officer (CCO), in charge of corporate credit appraisal and disbursement at the bank said it is wrong to assume that the bank will lose share. “Managing risk better has to be seen as improving the filters and for example looking at better rated bonds or under writing smaller amounts. Axis has Read More – Source