IDBI Bank, UTI Bank plan stake sale, takeovers

IDBI Bank, UTI Bank plan stake sale, takeovers
ENS ECONOMIC BUREAU & PTI

MUMBAI/NEW DELHI, JAN 17: New generation private sector banks, IDBI Bank and UTI Bank are looking for buyers to sell part of their equity in the near future. Both the banks are also looking for picking up equity in any other bank which is up for sale.

While IDBI Bank has kept options open for acquiring an Indian bank and said it was exploring possibilities of offloading 20-25 per cent stake to a foreign bank, UTI Bank is working on a similar strategy.

"We are open to acquiring an Indian bank," IDBI Bank chairman M S Verma told reporters on the sidelines of a seminar in Delhi when asked whether it would follow the footsteps of its nearest rivals ICICI Bank and HDFC Bank.

In order to comply with the Reserve Bank directive of bringing down promoters' stake in private banks, Verma said: "We are considering the best possible opportunities including sale of stake to foreign bank."

There could be two possibilities - offloading 20-25 per cent to a strategic investor or tapping the market through a public offer. "The strategic investor could be a foreign bank," Verma said when asked about the partner the bank was looking for.

The former State Bank chairman did not elaborate but insiders say the bank was keen on a new generation private bank which would match the technology and workforce of IDBI Bank.

The move comes at the outset of a consolidation that is taking place in the banking sector with HDFC Bank acquiring Times Bank and ICICI Bank inking pact with Bank of Madura in the recent past.

The option to acquire another bank would be part of IDBI Bank's organic growth plans. "We have plans to extend our branch network to all major 60 cities from the present 37 cities," Verma said.

On the otherhand, UTI Bank's blue print includes achieving growth through take over of another bank in course of time, further capital infusion and branch expansion during the current fiscal. ``We will be happy to takeover a bank when we get suitable one,''said a top UTI Bank official. Insiders say UTI bank is looking at Bank of Punjab and Centurion Bank as takeover targets.

``The banks's immediate priority is to expand its capital either though right issue or through debt route or through strategic disinvestment... we will be take a decision on any particular option very soon,'' said a UTI official adding that a foreign tie up is not ruled out as a part of strategic disinvestment.

At present, the banks' capital adequacy ratio is pegged over 12 per cent and the bank wants to maintain a high capital adequacy ratio for its business expansion.

In the new competitive scenario, UTI Bank is making all efforts to position itself as the customer and technology friendly bank to expand its customer base beyond existing 7 lakh level. About take over the officials have said that it would provide the bank a larger network facility immediately.

The IDBI Bank chairman did not elaborate on the time frame of the IPO. Verma said the bank was currently increasing its e-initiatives by launching mobile banking in major metros including New Delhi. "The mobile banking facilities would be extended to 10 cities shortly," he said.

IDBI Bank, currently with an equity base of Rs 140 crore, was promoted by financial institution IDBI during the same time when RBI granted licences to banking arms of three other financial power houses ICICI, HDFC and UTI.