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The Union Bank of India (UBI) has received Reserve Bank of India approval for setting up a subsidiary in the UK, its Chairman and Managing Director, Mr M.V. Nair, has said.
This will be the first overseas subsidiary for the bank and efforts are being made to get regulatory approvals in the UK, Mr Nair told Business Line on the sidelines of an event here on Friday.
He pointed out that most of the regulators these days were looking at a subsidiary-based model for allowing entry of foreign banks into their respective markets. “When you enter a market, it entirely depends on how the regulator looks at you. The advantage is, in case you have a subsidiary approval, then we can open branches across the European Union”, Mr Nair said.
Union Bank is also looking to open branches in Belgium and also at Sydney in Australia, he said, adding that the bank was in the process of getting approval from the local authorities there. The RBI has already given its nod for these overseas forays.
Lending, deposit rates
Meanwhile, on lending and deposit rates, Mr Nair said that Union Bank had no immediate plans to raise lending or deposit rates although the RBI had on Thursday hiked both the repo and reverse repo rates by 25 basis points each.
Mr Nair noted that there was no reason for deposit rates to go up when deposit accretion was good. “On the lending side, there is a reason why lending rate may have to go up, but the timing and quantum may have to be assessed only as things evolve. Not in the immediate future”
On net interest margin (NIM), Mr Nair said that the bank was looking at an NIM of 3.25 per cent for the current fiscal, substantially higher than the NIM of 2.7 per cent recorded in 2009-10. “Next year (2011-12), I expect the NIM to slightly come down to 3.1 per cent as the deposit cost has gone up in last few months. This could impact our NIM next fiscal”, Mr Nair said.
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