California-based SVB Financial, the parent of Silicon Valley Bank, is eyeing banking licenses in China and India, Asia’s No.1 and No.3 economies, as part of its international expansion, its chief executive told Reuters.
The bank, which focuses on lending to the technology, life sciences, venture capital and premium wine industries, has moved into Israel, China, India and Britain as it looks to take its venture capital business model overseas.
The bank, valued at close to $2.5 billion, has a joint venture, which is subject to regulatory approval, in China with Shanghai Pudong Development Bank Co Ltd and has invested in Chinese companies such as Zhejiang Uni-power Guaranty and Zero2IPO Group, and venture capital funds.
“In China, we’ve announced a joint venture, and our goal is to get a banking license there, and the same in India,” Greg Becker said in a telephone interview.
Becker took over as CEO in January to allow previous-CEO Ken Wilcox to focus on developing the China joint venture.
SVB, operates a non-banking financial company in India, but has no joint venture partner there.
“In India, right now, our strategy is to go-it-alone,” Becker said, adding the Indian subsidiary works with established venture capital players and lends to venture-backed companies.
The Indian venture capital market is growing fast and has been a target for the likes of private equity giants KKR & Co, Warburg Pincus and Carlyle Group.
PRIVATE BANKING PUSH
SVB is also looking to grow its wealth management business, eyeing the deep pockets of investors in venture capital with whom it already has business relationships.
“We have deep relationships with the venture capital, private equity and the technology community, and we think it’s a natural change to work with them even on a personal level,” Becker said.
The bank, which has also invested its own money along with venture capital, and sold shares when LinkedIn listed last month, is keeping all its options open in expanding its private banking business.
“We may partner with people with external expertise or build expertise on our own,” said Becker.
The lender, which had total assets of $18.6 billion at end-March, is hiring additional private bankers and has not ruled out acquisitions.
Banks are beefing up their wealth management businesses as they look to counter slow loan growth and tighter regulation that threatens to chip away at bank margins.
SVB, which expects solid loan growth in 2011 even as other lenders struggle to grow loan books, predicts a booming technology industry will increase loan demand and reduce the impact of increased competition.
“We are seeing competition, but we’re impacted by it less than in other markets that aren’t growing as fast,” said Becker.
Shares in SVB have gained 6.6 percent so far this year, and in late-April hit a 29-month high of $60.73.