HSBC to add 5,000 India staff in 18 months

By Himangshu Watts and Tony Munroe

MUMBAI (Reuters) - Global lender HSBC Holdings (HSBA.L: Quote, Profile, Research, Stock Buzz) expects to add about 5,000 staff in India over the next 12 to 18 months, and is building up its business serving domestic retail customers as well as small and medium-sized companies, the bank's India head said.

Naina Lal Kidwai, India country head of HSBC (0005.HK: Quote, Profile, Research, Stock Buzz), also said the bank would decide in the next two or three months whether to enter the retail brokerage business in India, where its net profit rose 64 percent in the fiscal year that ended in March.

Kidwai told the Reuters India Investment Summit on Thursday that HSBC had stepped up its focus on smaller business customers, who were driving a lot of economic activity.

"It's also where the growth of India comes from, with 60 percent of India's manufacturing and exports coming from the SME (small- and medium-sized enterprise) sector. Is this a sector that we can ignore?"

The bank had invested $1.7 billion as of March in its various India businesses including investment banking, capital markets, asset management, insurance broking and software development.

PROFIT GROWTH

Kidwai also said London-based HSBC's previously stated goal of building India into a $1 billion business on a pretax profit basis within five years is well within reach.

"We'll do that in five years," she said. "Five years is too long."

In the first half of 2007, HSBC's pretax profit from India totaled $299 million. India's financial services sector has been growing at about three times gross domestic product, which is expanding at a nearly 9 percent annual clip.

Kidwai said strong economic growth in India, where less than 40 percent of households have bank accounts, augured well for further financial services growth.

"The good news in a buoyant economy is that what appears to be risky actually ends up being not so risky, because whatever you touch pretty much turns to gold."

HSBC, the third-largest foreign lender in India behind Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz). It operates 47 branches in India and competes with local players led by State Bank of India (SBI.BO: Quote, Profile, Research, Stock Buzz), ICICI Bank (ICBK.BO: Quote, Profile, Research, Stock Buzz) and HDFC Bank (HDBK.BO: Quote, Profile, Research, Stock Buzz).

India restricts the number of branches a foreign bank can open and limits their stakes in Indian firms, but some liberalization is expected following a regulatory review in 2009.

Its current staffing of about 30,000 in India includes 15,000 staff serving its global operations and another 6,000 software engineers.

(Editing by John Mair)