Kannan has recently been to London to take a close look at the Uco branch's operations. BoB is in the process of completing the due diligence exercise for the branch.

According to sources, the London branch of Uco has assets worth about $65 million. "There has already been a run on the deposits of the branch on the news of Bank of England's unhappiness with the Uco operations in London and the imminent closure of the branch," sources said. BoB will take over the branch's good assets, including some syndicated loans, at market value while other assets on the collection basis.

BoB has decidedto take over the Uco assets in London at the instance of the Reserve Bank of India. The RBI moved into the scene after Bank of England expressed its reservations about Uco's London operations. Bank of England was concerned about the capital adequacy ratio of the Calcutta-based bank.

The closure of the London branch of Uco is ironic as the bank has been able to register an operating profit of Rs 15 crore in the last fiscal -- against an operating loss of Rs 73 crore in the previous year -- largely on the back of improved performance of its foreign operations.

The net profit from global operations registered a 31 per cent jump in 1997-98 to Rs 25.41 crore, up from Rs 19.37 crore in 1996-97. The London branch of Uco has been making profits, sources said.

In 1991, BoB took over London branches of Union Bank and Punjab & Sind Bank while State Bank of India took over Punjab National Bank's London operations.

With the close down of the London branch, Uco will close shop in the UK. The London branch will bethe fourth overseas branch of the bank to be closed down. In the late '80s, Uco had closed down its North Point and Mongkok branches in Hong Kong followed by the Leicester branch in the UK in 1996. After the closure of the London branch, Uco will be left with three branches in Singapore and two in Hong Kong.

BoB is believed to have shown interest in taking over the entire overseas operations of Uco in case the Calcutta-based bank forwards such a proposal to BoB.

BoB has 39 branches spread over 10 countries with the maximum number of branches located in London, followed by Dubai. It also plans to buy out the stakes of Union Bank of India and Indian Bank in the Hong Kong-based deposit-taking company IBU International Finance paying Rs 35 crore each to the two banks.

It also holds majority stakes in its subsidiaries in Kenya and Uganda as well as the Indo-Zambia Bank.

To buy out the two banks' stakes in Hong Kong, BoB will pay in Hong Kong dollars without disturbing the current capital of the IBUInternational.

After receiving permission from the Reserve Bank of India and the centre, the bank will release rupee resources from its domestic operations to buy the Hong Kong dollar which will be paid to both the banks.

IBU International Finance was set up in the early '80s with equal contribution from the three banks. The single ownership for the institution was necessary to meet the new situation in Hong Kong, which was transferred to the Chinese government last year.