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BoB seeks cards ally

Calcutta, Sept. 8: The Bank of Baroda (BoB) is scouting for a strategic partner to sell a majority stake in its wholly owned subsidiary, BoB Cards Ltd.

“If we don’t find a suitable partner, BoB Cards will be merged with the bank itself,” said Anil Khandelwal, chairman and managing director of Bank of Baroda, on the sidelines of the 34th national convention of the All India Management Association here today.

BoB Cards is a loss-making subsidiary of the public sector bank. “Credit card business is aggressive in nature and its most important aspect is that one requires the domain knowledge, particularly for recovery of dues from cardholders. As of now, BoB Cards is making loss and we want to restructure the business,” Khandelwal said.

Earlier, the bank had merged BoB Housing Finance Ltd with itself by buying out National Housing Bank’s stake in the company.

The Bank of Baroda recently signed a memorandum of understanding with Pioneer Global Asset Management Company to sell a majority stake in BoB Asset Management Company Ltd, another wholly owned subsidiary that manages BoB Mutual Fund. According to Khandelwal, the bank is yet to sign a definitive agreement for this divestment. The bank will hold a 49 per cent stake in BoB Asset Management, while Pioneer Global will acquire the remaining 51 per cent. The new company will be called BoB Pioneer Asset Management Company.

An MoU for the bank’s proposed life insurance venture with Andhra Bank and the UK-based Legal & General is also in the wings.

“We are discussing various aspects of the deal, such as how the valuation of the joint venture company will be done when the government allows a 49 per cent shareholding by the foreign partner and whether the additional investment will be made in one go or in a phased manner, he added.

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