Financial Daily from THE HINDU group of publications
Thursday, Dec 12, 2002
Public Sector Banks
Money & Banking - Mergers & Acquisitions
Vijaya Bank eyes northern peers
Mr M.S. Kapur, Chairman
BANGALORE, Dec. 11
VIJAYA Bank is eyeing a North-based bank to increase its presence.
The Chairman of the Bank, Mr M.S. Kapur, while confirming the intention of looking at acquisition of a bank from the Northern region, declined to disclose the banks eyed.
Punjab & Sind Bank, Bank of Punjab and Bank of Rajasthan are the likely candidates for a possible acquisition, according to banking circles.
Mr Kapur said the acquisition would help the bank reach untapped regions in the North. The buy-out is likely to give Vijaya Bank a substantial portfolio of agriculture advances.
He said with the dwindling prospects of cash crops in the southern region, Vijaya Bank planned to strengthen its strong portfolio of agricultural lending. Having drawn up a road map for expansion in the next three years, the bank has decided to open 110 more branches to increase its retail and housing loan portfolio. However, it was also eyeing the acquisition of readymade asset to quicken the process of its aim to achieve more than double the present turnover of Rs 21,000 crore.
Northern India, with its steady cash crops of sugarcane, mustard and oil seeds and foodgrains such as wheat, cereals and pulses, offered good scope for agricultural advances. Historically, priority sector lending has maintained muted non-performing assets, as payback rates are quite high.
Banking analysts said that Vijaya Bank's move to swell its advances to "quality agrarian zones" would help boost the books and help leverage its assets.
Consolidation in the banking industry is suddenly gaining ground as income from traditional business of lending comes under pressure in the prevailing soft interest rate regime. "Size would be a major factor to sustain growth in long run," a banking analyst with a foreign fund said. "Additional revenue streams such as bancassurance and portfolio take-outs could emerge as one of the common strategies to propel growth," he added.
Vijaya Bank stock was up 1.17 per cent and closed at Rs 12.95 on the National Stock Exchange on Wednesday.
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