Calcutta, March 11: The Federal Bank will take the merger and acquisition route to gain a strong national presence. The hunt is on for a partner with a reach across the country, bank chairman K. P. Padmakumar said.
“Right now, it is not on our antenna. Going forward, mergers and acquisitions may become necessary,” Padmakumar said. He added that the search for a suitor would begin only next year.
Commenting on the bank's growth strategy, the chairman said retail banking would be its focus area. “Housing, vehicle, personal and jewel loans will continue to be our thrust areas in retail.” The banks advances in the housing sector had crossed Rs 500 crore.
Federal Bank’s net profit during the current fiscal is set to cross the Rs 100-crore mark and its capital adequacy ratio (CAR) will improve to 11.70 per cent from 9.46 per cent, he said.
The bank has no immediate plans to offer shares to foreign institutional investors to raise funds.
“As of now, we have no immediate plans to raise funds by offering shares to FIIs, who can now hold up to 74 per cent equity in private banks,” Padmakumar said.
He said the government’s decision augured well for banks that had CAR related or technology related concerns, but the Federal Bank had no such problems.
“All our 416 branches are fully computerised, of which 120 are interconnected and the number of interconnected branches would be increased to 200 within this month.”
He said despite domestic interest rates going down, NRI deposits remained unaffected simply because of high-technology orientation of the bank by which an NRI remitting money from the Gulf finds the deposit transferred to the recipients account within two hours.
To increase CAR from 9.46 per cent to 11.70 per cent, the bank is currently raising Rs 150 crore through Tier II bonds. The issue will close on March 17. “We may have to raise some more Tier II funds to reach CAR of 12 per cent. We can float another bond of Rs 50 crore next year,” Padmakumar said.
The bank has issued notices to 165 small and medium parties under the Securitisation Act.