He has become quite a fan of Hindi movies and loved Sholay although he can't quite understand the need for the frequent song and dance sequences. But Stuart Davis enjoys them and, on occasion, has even managed some of the dance steps when called upon to do so. "I learnt the moves that were simple but looked good and kept repeating them," says the chief executive officer of HSBC India, who also hums a tune for us. Davis doesn't miss an opportunity to discover new places, having travelled as far as the Sunderbans on one of his CSR trips. He's partial to Indian cuisine and tells us over lunch that he loves the many ways that it's served around the world.
We're at the newly opened Zia, an Indian restaurant at the Oberoi, Mumbai. And the view of the Arabian Sea on this clear sunny afternoon is simply gorgeous. Davis, who grew up in Adelaide, is telling us about how cuisines are being fused together in many parts of the world. Coincidentally, we discover as we glance at the menu that this is happening at Zia, too. So there's a Scottish tandoor salmon and Davis decides he's going for it.
Davis hasn't checked the scores of the India-Australia match in Mohali which, at that point, seemed to be going Australia's way. But he's had a taste of IPL cricket in Bangalore, not, as he says, "with corporate tickets, but with the masses". He turned out to be the only non-Indian in the stands and it was quite an experience, he recalls. Davis, who prefers the longer version of the game, is going to be home for Christmas and plans to catch a glimpse of the Ashes on Boxing Day. And on his to-do list is a game at Lords and at Eden Gardens, even though he won't be able to watch his favourites Vivian Richards or Steve Waugh in action. It's a bit of a shame he says that there isn't enough of a crowd these days at Test matches. He recalls a headline in one of the newspapers when the Commonwealth Games were on in Melbourne for a netball match, which read, "Australia scores more goals than spectators." Davis, who started out as a lawyer, didn't play too much cricket himself but his father played with Don Bradman at the local level.
These days, though, it's just a bit of golf on the weekends because the HSBC chief has been busy at work and also criss-crossing the country doing CSR trips. His most memorable experience so far has been a trip to a village in the Sunderbans that had been wrecked by the storm last year. Davis, who made it there in a boat, is amazed at the resilience of the people, their generosity and also at the fact that his mobile phone worked in so remote a place. Equally amazing, he says, were the inhabitants of the Rann of Kutch who lived in such difficult conditions in the salt pans. Most of all, Davis seems to have been fascinated by the water conservation techniques in the desert in Rajasthan. "It was December and I was thinking there are seven months to go before the monsoon arrives," he says.
The salmon arrives, with the waiter unveiling it in a somewhat dramatic fashion. So, could the Royal Bank of Scotland deal get done in time to be a Christmas present for HSBC? "Well, we're in the process of getting the regulatory approvals. How many branches we get will really depend on RBI though we'd know how many we'd like," is all that we can get out of the HSBC chief who offers me the salmon, which is really excellent. What, we ask, is so attractive about RBS's assets? "For us, what we buy is two or three years growth and then we start leveraging the growth off a bigger base. That together with the potential branches to widen our distribution all contributes to the business," he explains.
Given the urbanisation of India, HSBC's long-term strategy is to position itself in the smaller cities and Davis believes that over time many of today's so-called under-banked branches may turn out to be valuable. Would HSBC be looking to try and replicate the kind of rural banking model that it had experimented with in China? The concept is somewhat different there, he explains. In India, the local banks have better reach and are, therefore, able to get to profitability more quickly. But Davis is clear that over a ten-year time frame, it would make sense to be in some of the less-banked markets. "The question is when do you start that investment because if you start too early then the cost base increases and not the revenues but if you wait too long, you suddenly find that you've missed the opportunity." He adds that one thing he's learnt about in India is that it's important to get the timing of the investment right. "Right now it's more a test and learn for us to try and see what the model is that's going to work for us as distinct from the one that'll work for the private and PSU banks. Let's see if we can get the model right so that once the market moves then we can execute quickly."
The lamb biryani that I've asked for is just so-so; the meat could certainly have been more tender. Anita's not too impressed with the murg makhanwala either and can't figure out why it's been served with khichdi. As for the rotis, the less said the better. Davis seems to be enjoying his nalli mirch korma though.
The retail business, Davis is clear, will continue to be an important piece of HSBC's business plan despite the "expensive learning over the last five years" especially in the unsecured retail book, mainly credit cards, which the bank has been running down. The bank has also stopped the consumer finance business. But he points out that the bank has made fairly large investments, which gives it an edge over any new foreign bank that may want to enter the space. "Even if they were to deregulate the market and free it up, it would take someone a long time to catch up." In fact, the bank has started acquiring customers for its cards business, though the pace of growth wouldn't be as rapid as it was between 2004 and 2007. I ask Davis to try out some of my biryani which he does, saying it resembles the Indian version of an Australian meat pie, probably because of the 'dum'.
Davis adds that the bank is also leveraging the network of InvestDirect, HSBC's retail brokerage, which has 77 branches and about 100 franchises. Moreover, the NBFC licence with InvestDirect is also being utilised better. Retail broking must be a difficult business with small investors out of the market, we say. "We're moving towards profitability and we expect it to be not only a contributor to earnings but also provide us with distribution."
We're skipping dessert—Davis confesses he hasn't exercised in a long time and has started going for early morning walks only recently—and continue batting the breeze over coffee. The HSBC CEO has just finished reading Rama Bijapurkar's We are like that only, which he enjoyed, gleaning some valuable insights into the Indian consumer. "It's almost as though it was written for the westerner." He adds that it brought home to him some of the challenges at the bank, namely that to be able to really grow and take a significant share of the market, one has to grow volumes at a very low price. Clearly, the HSBC CEO is working overtime these days. He's candid enough to tell us that he watches a couple of hours of television every evening but wouldn't be able to tell us what exactly it was that he viewed. For a change, he plans to watch Robot the next day, having already seen Anjaana Anjaani. Stuart Davis is obviously enjoying India.