Comments
An acquisition has to be of right size and come at the right price so that the bank can derive value out of it, according to Chanda Kochhar, Managing Director and CEO, ICICI Bank.
The chief of India’s largest private sector bank said her bank has been quite active and open to acquiring assets (banks).
“There are no restrictions….At this time, there are very few options available,” said Kochhar in an interview with Business Line .
In the last decade or so, ICICI Bank has grown its branch network by taking over three old-generation private sector banks.
The bank’s first acquisition was in 2001 (Bank of Madura with 269 branches), the second in 2007 (Sangli Bank with 190 branches), and the third in 2010, when it acquired Bank of Rajasthan (463 branches).
ICICI Bank now has a network of 3,595 branches and 11,162 ATMs across India, and presence in 19 countries.
Even as the bank is game for acquisitions, Kochhar said: “But at what price and how much more they add to your core in terms of your size is important. As a bank keeps getting bigger and bigger, an acquisition to have relevance should be bigger and bigger.”
She observed that there was a time when even a 100-branch acquisition made a lot of sense for the bank.
“With over 3,500 branches today, we will weigh what size will make sense for us (to acquire) and at what price. “Today, we add more than 500 branches every year. So, in a way, we are adding one bank every year. So, we have to weigh the costs and benefits even more,” said Kochhar.
On likely competition from new banks in the private sector, the ICICI Bank chief felt that the banking pie in the country is large enough to offer growth opportunities for existing as well as new players.
“When you look at the medium and the long term, there is enough business for a lot of players to engage in.
“Secondly, banking is an investment in franchise. It is a continuous process of investment in your distribution, brand, products, pricing, and so on. Banking is a business for the long term competitive players to be in,” Kochhar said.
In the immediate term, with new banking licences coming in, Kochhar surmised that the banking sector may see some disruptive competitive practices, some talent war, and intermittent pricing strategies which may be competitive.
“But for big and long-term players like us, we will have to adopt some of those intermittent practices and focus on our core competence,” she added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.