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Our Bureau

Kolkata , Jan. 18

ERNST & Young, appointed by Allahabad Bank to work out a revival plan for its subsidiary Allbank Finance, has recommended that the company be turned into a merchant banking and project appraisal outfit, capable of generating substantial fee-based income.

The proposal to convert Allbank Finance into a well-capitalised subsidiary is well on track, indicated Mr O.N. Singh, Chairman and Managing Director of Allahabad Bank. "We had engaged consultants, Ernst & Young being one of them, to look at Allbank Finance. Its revival will gel with our plan to step up fee-based activities," he told newspersons here on Tuesday.

The existing fee-based businesses of the bank include distribution of mutual funds and insurance, for which tie-ups have been forged with UTI, LIC and National Insurance. During the first three quarters of the current fiscal, the bank has retailed 80,000 policies with premium income of over Rs 22 crore under the bancassurance programmes.

The bank on Tuesday announced a 90 per cent rise in net profit (to Rs 462 crore) during the nine-month period ended December, 2004 over the corresponding period last year. It increased by 61 per cent during the third quarter ended December over last year's corresponding quarter. Operating profit during April-December 2004 increased to Rs 851 crore (Rs 556 crore).

Total deposits increased by 21 per cent during April-December 2004 (10 per cent). Net NPA declined to 1.48 per cent as on December 31 from 2.37 per cent as on March 31, 2004 and 4.17 per cent as on December 31, 2003.

Allahabad Bank, the CMD mentioned, proposed to issue fresh capital in March this year. "We will come up with the offer soon after the Budget", he observed.

Incidentally, the bank plans to establish an IT training institute in Chandigarh for updating the skills of its officers.

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