Hyderabad, Jan. 19
ANDHRA Bank has acquired five per cent holding in the Principal PNB Asset Management Company aimed at substantially enhancing its fee-based income in the era of falling treasury incomes.
The bank has entered into a memorandum of understanding on Wednesday with Punjab National Bank (PNB), Vijaya Bank and the US-based Principal Financial Group. The Andhra Bank Chairman and Managing Director, Mr T.S. Narayanasami, and the Principal Financial Group Senior Vice-President, Mr Norman Sorensen, signed the MoU.
With this, Andhra Bank joins the existing joint venture between PNB, Vijaya Bank and Principal Financial Group to sell the long-term mutual funds and related financial services of the joint venture in the country. On receipt of requisite regulatory and Government approvals, Andhra Bank proposes to enter into definitive joint venture agreements with the partners.
Andhra Bank has invested Rs 13.25 crore to acquire the five per cent holding in the AMC. At present, PNB has a holding of 30 per cent and Vijaya Bank five per cent, while Principal Financial Group enjoys majority holding of 60 per cent.
According to Mr Sorensen, the partnership was intended at creating a synergy that would develop significant financial and other benefits to the partners. Andhra Bank would now promote and support the asset management company to manage the mutual fund business and market and distribute the alliances' products through their branch network.
Appreciating the efforts of Andhra Bank in selling over Rs 40 crore worth mutual fund products of Principal PNB during the last 45 days, Mr Sorensen said the asset management company would now upwardly revise its business targets on Andhra Bank joining the venture.
The bank has set a target of Rs 500 crore of business through selling mutual fund products alone. The bank has sales alliances with Tata MF, UTI and SBI MF and has no plans to enter into similar arrangements with other MFs.