Australia’s largest bank is looking to expand its partnerships.
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Commonwealth Bank of Australia’s (ASX: CBA) share price could get a long-term boost if its India partnership plans pan out.
CBA is best known as a bank that serves households and businesses in Australia and New Zealand. But some of these clients have financial ties in India. This could be an Australian business with operations in India, or an Indian business with operations in Australia.
Commonwealth Bank of Australia has announced that it has signed a memorandum of understanding (MOU) with ICICI Bank, a leading Indian private sector bank, to collaborate “to support customers in the Australia-India corridor”.
CBA’s Indian partnership
CBA hopes to achieve four goals with its Indian financial institution partners.
According to the MOU, the primary objective is to “facilitate introductions of corporate and commercial clients interested in investing or doing business in the other bank’s country”.
Secondly, CBA hopes to “facilitate trade between Australian and Indian corporate and business customers by providing banking services to them and providing guidance on cross-border trade opportunities”.
The third objective is to “assist clients in migrating to Australia and India through banking services”.
Finally, CBA hopes to “support cross-border payments by collaborating on customer-centric solutions”.
CBA will hold workshops with clients in Sydney and Brisbane this week to increase understanding and accelerate development of the Australia-India corridor.
What did management say?
CBA Commercial Banking Group Executive Mike Vacy-Lyle explains why this is a beneficial partnership for ASX bank shares:
The business environment offers significant opportunities for Australian and Indian businesses and we are pleased to be working with ICICI Bank to better facilitate trade and promote prosperity in both countries.
We understand that doing business in other countries presents both opportunities and challenges. Therefore, we are pleased to partner with ICICI Bank to give our corporate clients exclusive access to a leading banking partner across multiple countries.
The economic ties between Australia and India are becoming increasingly important. Especially considering that the Australia-India Economic Cooperation and Trade Agreement (ECTA) will come into force on 29 December 2022.
Under ECTA, 85% of Australia’s exports to India (by value) are now duty-free, while 96% of imports from India are now duty-free. Both countries are expected to further reduce tariffs to promote trade growth between the two countries in the coming years.
CBA share price snapshot
Commonwealth Bank’s share price has risen about 40% since the start of 2024, while the S&P/ASX 200 Index (ASX: XJO) has risen nearly 10%.
Motley Fool contributor Tristan Harrison does not own any of the stocks mentioned. Motley Fool Australia’s parent company, Motley Fool Holdings Inc., does not own any of the stocks mentioned. Motley Fool Australia does not own any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorized by Scott Phillips.
