The Hindu Business Line : UTI Bank plans investment banking arm in London

The UTI Bank Executive Director, Mr S Chatterjee, told newspersons here on Wednesday: " We have sought clearance from the RBI for this venture." He said that the bank would start operations immediately on receipt of the clearance.

UTI Bank also proposed to open a branch in Dubai and another Representative office in the same region. The bank was awaiting permission from the UAE central bank. Besides, it had also made an application to the Hong Kong Monetary Authority for opening a branch in the region. Mr Chatterjee said, " We will focus in increasing our Asian footprint before moving into Europe." Currently, the bank's foreign offices are only in Singapore and Shanghai in China.

`40% growth likely'

The bank, he said, hoped to grow its assets by at least 40 per cent this financial year. The growth was supported by large capital raising that the bank took up in the last few months, both in the domestic and in the international markets. UTI Bank has just raised Rs 214 crore through perpetual bonds priced at 11.05 per cent in the event of call options not be exercised at the end of 10 years in the domestic market. It had also raised hybrid capital from the international markets.

Despite the high pricing of these forms of capital, Mr Chatterjee said, the bank would end with a net interest margin (NIM) of three per cent. Currently UTI Bank's NIM is 2.75 per cent. The improvement in the NIM, he said, would largely be driven by better yield on assets and low cost of the deposits. The bank, he said, was focussing on raising resources in the form of demand deposits.

Referring to the bank's reported foray into life insurance, he clarified, " We have no intention of getting into the manufacture of life insurance products." However, he added, the bank intended to get into distribution through the banc assurance model. UTI Bank was yet to identify the life insurer for the purpose, he added. UTI Bank already has a banc assurance arrangement with Bajaj-Allianz General Insurance Company for distribution of non-life products.

`No conflict of interest'

Asked whether the proposed bancassurance would conflict with the interest of its equity holder, Life Insurance Corporation of India (LIC is a 10 per cent stake holder in UTI Bank), Mr Chatterjee said, " LIC is a stakeholder in many banks other than us including ICICI Bank. There is no conflict of interest."

UTI Bank has launched a new subsidiary, UBL Sales Ltd . This subsidiary, he said, would market asset products such as retail loans and credit cards of the bank and begin operations in 42 locations across the country. The subsidiary, he said, would hire 3500 sales staff and would initially target the banks own customer base for selling these products, he added.

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