Venugopalan: Hungry

Mumbai, Jan. 5: Bank of India (BoI) is planning to take over a bank in Indonesia as part of its plan to expand abroad.

This was indicated by the bank?s chairman and managing director M Venugopalan today. He said BoI currently has a representative office in Indonesia and taking over a bank was more economical than converting this office into a branch. ?That is the only feasible way,? he said.

The bank is understood to be in talks with two potential targets in that country. The BoI chairman explained that with India opening up, one has to be a global player.

At present, the overseas footprint of BoI encompasses over 19 branches and three representative offices in four continents with a presence in financial centres like London, New York, Paris, Tokyo, Singapore and Hong Kong.

Venugopalan also revealed that the bank is awaiting approvals to open branches or subsidiaries in Belgium, Canada, Tanzania and Bangladesh apart from a representative office in Myanmar.

BoI?s overseas acquisition initiative mirrors that of State Bank of India?s, which has been looking at potential targets in Africa or Asia. Recently, SBI chairman A. K. Purwar said the bank is close to sealing a buyout.

According to the market grapevine, BoI is also considering a merger proposal with Union Bank of India, another public sector bank. When asked on this issue, Venugopalan said though the bank is not averse to mergers and acquisitions, there is nothing tangible on this front.

He also said the bank?s growth in profits is likely to be lower in the current financial year due to slowdown in income from the sale of investments.

Second flotation

Bank of India is planning to float a second domestic public offering of 10 crore new equity shares and raise $200-300 million through medium term notes (MTNs) in the next financial year to shore up the capital base and fund international business operations.

The bank is planning a public issue of 10 crore shares of Rs 10 each, to be issued at a premium, in July to strengthen the Tier 1 capital, Venugopalan said. The capital adequacy ratio of the bank was currently at 12 per cent, well above the regulatory norm of 9 per cent. This would be diluted as the credit growth has been substantial, he said.

After the public offering, equity capital would expand, diluting the government?s stake to below 60 per cent, he added.