India Banks Capitalize on Wall Street Crisis

A sign of the times: Mumbai-based banks have recently poached top talent from such firms as Bear Stearns, HSBC, and Merrill Lynch

By Nandini Lakshman

An Indian stock trader works on a computer as he trades shares at a brokerage firm in Mumbai. PAL PILLAI/AFP/Getty Images

Compared with its Wall Street rivals, India's Ambit Holdings has long been considered small fry. Launched in 1988, the Mumbai-based investment bank has just 180 employees. With the financial crisis engulfing the big Wall Street firms, though, Ambit executives want to grab the opportunity to gain ground on their better-known competitors. Over the past year and a half, Ambit has expanded into wealth management, private equity, and insurance brokerage. The expansion has helped it emerge as one of the top five banks in the Indian league table.

Ambit's biggest coup came on Sept. 15. That's when it announced it had poached Andrew Holland, head of the strategic risk group at DSP Merrill Lynch, the Indian joint venture that Merrill (MER) operates. Holland brings with him a four-member proprietary trading team. Ashok Wadhwa, chief executive of Ambit, claims he had been negotiating with Holland for the past three months, and the news surrounding Merrill's shotgun acquisition by Bank of America (BAC) did not force anyone's hand. However, the bad news didn't hurt, either. "The financial crisis couldn't have come at a better time," he says.

Other Wall Street refugees are finding their way to Ambit. In August, Wadhwa appointed Nikhil Puri, from Bear Stearns' New York office, as managing director of Ambit's corporate finance business. Now, Wadhwa says, Ambit is in final talks with a handful of Lehman employees.

A Boost for India Brokers

Wadhwa isn't the only one hiring. Over the last year, the subprime crisis in the U.S. has provided a major boost to Indian brokerage houses. With employees worried about the stability of U.S. and European banking giants, local rivals have been poaching talent from their big Western peers. Homegrown Indian banks have been luring institutional brokers, wealth managers, and asset management professionals at foreign banks, with employee stock options and a share of profits. What made it easy was the booming stock market, which yielded returns of more than 40%, a growing group of wealthy Indians, and high consumer spending.