The Hindu Business Line : Andhra Bank joins the race

Once it receives the go ahead from RBI, the bank proposes to take up due diligence exercise of UWB so as to firm up a detailed proposal for acquisition

Hyderabad , Sept. 4

Andhra Bank appears to have turned aggressive in its growth plans. Close on the heels of its decision to foray into life insurance arena with a Japanese partner, it has now decided to test its abilities in the space of Indian banking mergers and acquisitions.

The bank on Monday joined the race for taking over the United Western Bank (UWB) which was placed under moratorium by the Reserve Bank of India on Saturday.

Board approval

The board of directors of Andhra Bank has approved a proposal for submission of expression of interest to the RBI for taking over UWB. However, the bank said the board decision is subject to regulatory, statutory and other approvals.

Once it receives the go ahead from RBI, the bank proposes to take up due diligence exercise of UWB to firm up a detailed proposal for acquisition, sources said. If successful, it would become the first acquisition for Andhra Bank.

According to sources, Andhra Bank is of the view that the acquisition of UWB would strengthen its position in view of a number of synergies between the two banks. The synergies exist mostly in terms of network of branches and geographical contiguity.

Andhra Bank plans to impress upon RBI its track record as the largest nationalised bank with sound fundamentals that could offer an effective and professional management to UWB. Notwithstanding the financial problems of bad loans and poor capital adequacy ratio, UWB has a robust network of 230 branches spread over 47 districts of nine States. Further, it has a strong deposit base of Rs 6,480 crore and loans of Rs 4,006 crore. Andhra Bank believes that being a public sector bank it is in an advantageous position to acquire UWB compared to competitors from private sector. The examples cited in this context include the RBI authorising Oriental Bank of Commerce to acquire Global Trust Bank and enabling Punjab National Bank to take over Nedungadi Bank.

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