The Hindu Business Line : BoB to enter stock broking, float subsidiary

BANK of Baroda (BoB) plans to enter the stock broking business by floating a subsidiary, which will be hived off into a joint venture with an ally. It has initiated discussions with a few parties in its bid to identify the most suitable partner.

The bank, which has separate subsidiaries for credit cards, asset management, housing finance and primary dealership, seeks to leverage the proposed venture to enter what is being considered as a promising area, replete with growth opportunities. A business model is being worked out, based on which the joint venture will be operationalised.

According to Mr P.S. Shenoy, CMD, the bank hopes to expand each of these outfits on a stand-alone basis. ``They are doing well, contributing critically to our overall business,'' he told newspersons on Wednesday, adding that there would soon be some scope for rationalising the number of subsidiaries. In fact, the housing finance venture will shortly be merged with the parent bank. Discussions have been initiated with NHB, which holds a 30 per cent share in the company. The process of merger is expected to be concluded by March 2005.

BoB expects to clock a 22-25 per cent growth in business for the current financial year, and a similar increase in profits as well. Incidentally, its retail business is expected to record critical growth in the coming days. NPA reduction will be one of its focus areas in the current year; the bank's NPA, as on December 2003, stood at 3.47 per cent and efforts are on to reduce this to around three per cent by March next year.

The bank is looking at securing a tie-up with a nationalised general insurance company. As of now, it has no plans to enter life insurance business. BoB also plans to increase its staff strength.

Mr Shenoy, who observed that the M&A situation was ``quite ripe'' in the country at this juncture, further underlined the bank's need to expand through acquisitions. However, nothing specific is on the cards, it was clarified.

Plans China office

BoB is looking at a presence in the Chinese market, which is quickly opening up to Indian investors and entrepreneurs. Beginning with a representative office in China, it proposes to gradually scale up its operations in the neighbouring country.

The bank, Mr Shenoy said, hopes to service the opportunities that are fast emerging in the Hong Kong region, for which an office in China is considered necessary. Two-way trade is set to increase in the coming days and the bank hopes to capitalise on the trend.

``We already have a subsidiary, BoB Hong Kong Ltd, which runs a couple of branches. A third outfit is now being planned,'' he said.

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