Financial Daily from THE HINDU group of publications
Wednesday, Dec 10, 2003
Financial Daily from THE HINDU group of publications Wednesday, Dec 10, 2003 |
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Money & Banking
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Mergers & Acquisitions HSBC open to hiking stake in UTI Bank Our Bureau
Mumbai , Dec. 9 HONGKONG and Shanghai Banking Corporation Ltd (HSBC) may increase its stake in UTI Bank as and when the banking legislations change and other shareholders in the private bank express clarity on their interests, according to Mr Niall S.K. Booker, CEO, India Region, HSBC. Asked whether HSBC's stake in UTI Bank would increase, said a jovial Mr Booker, "Quoting Mark Twain, let me say, as facts change so will our opinions." "The legislations would have to change and there should also be shareholder's consent from the Indian promoters, UTI, LIC and GIC for HSBC to increase stake. The FDI limit should ideally be lifted to 74 per cent and voting rights should be aligned with it," said Mr Booker at the sidelines of a press conference held by HSBC Mutual Fund here today. The lifting of the FDI limit in banks and granting appropriate voting rights to foreign players has been announced by the Finance Minister in the Union Budget but the requisite legislative changes are yet to be carried out. "As legislations change in favour of higher FDI, there will be some international banks, not many, which will look at acquisitions in India such as Citibank, Stanchart, ABN AMRO who already have a presence in Asia and India. "We have put our foot forward when the laws were not so much in our favour and that has helped display our intention to stay in India. We have total investments of $600 million (approximately Rs 2,731.8 crore) in this country.'' Mr Booker had a word of praise for the Reserve Bank of India and the Ministry of Finance for the ease and speed with which they granted an in-principle approval to the acquisition of stake in the private bank. Are you eyeing more such acquisitions? Asked a reporter. Mr Booker jokingly answered, "I don't think I will make any announcement here today!'' On a more serious note, he added, "If something interesting comes along, we will certainly look at it." On developing synergies between HSBC and UTI Bank said Mr Booker, "We will have consultations with Dr Nayak on developing synergies at the product level since that is the most obvious. For instance, it could be the credit cards business since UTI Bank does not have a credit card product. "It could also extend to third-party distribution of products like HSBC Mutual Fund products through the UTI Bank branches, which would work as a win-win proposition. We will keep having meetings with Dr Nayak soon.'' Interestingly enough both Mr Booker and Dr P J Nayak, CMD of UTI Bank went to Cambridge University. Explaining the factors that made HSBC choose UTI Bank, said Mr Booker, "UTI Bank has comparatively low non-performing loans, a healthy coverage ratio, a sound management, a good network and a simple shareholding pattern. "This acquisition will also help us achieve a portfolio diversification thereby mitigating risk."
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