The Hindu Business Line : Bank of Baroda to restructure subsidiaries

BANK of Baroda (BOB) is planning to revamp its subsidiaries by infusing fresh capital and providing new competencies, said Dr A.K. Khandelwal, Chairman and Managing Director.

"We have already started the process. It is a priority item now," Dr Khandelwal said.

The bank has earlier announced plans to merge BOB Housing Finance Ltd with itself. At present, the National Housing Bank has stake of 33 per cent in this housing finance arm. BOB would buy this holding before the merger process is completed.

The bank is now planning to restructure other subsidiaries such as BOB Capital Markets Ltd, BOBCARDS Ltd and BOB Asset Management Company Ltd.

Ruling out merger of these subsidiaries, Dr Khandelwal said, "We are looking at each one separately and how to create value. The idea behind these subsidiaries is to focus on the activities which are not part of the bank's core functions."

The restructuring plans for these subsidiaries include infusing fresh capital and hiring people with market related salaries.

Bank of Baroda has already infused Rs 80 crore in BOBCARDS and is examining the need for the same in the other subsidiaries. For the year 2004-2005 the company had a net profit of Rs 4.5 crore against Rs 4.3 crore in 2003-04.

BOB Housing had a net profit of Rs 8.6 crore for the year 2004-05 (Rs 7.4 crore). BOB Asset Management posted net profit of over Rs 57 lakh (Rs 45 lakh) and BOB Capital Markets showed a loss of Rs 19.4 crore for 2004-05, against profit of Rs 11.4 crore in the previous year.

The bank is also one of the bidders for UTI Securities. "We have filed the Expression of Interest as we see value in it. It is a ready made stock broking unit, in which we have no presence as of now," Dr Khandelwal said.

The public sector bank is coming out with its second public issue of 7.1 crore equity shares on January 16. With this issue the Government holding in the bank would come down to 53 per cent. The Capital Adequacy Ratio, which is currently at 12.75 per cent, could increase to 13 per cent post the issue.