The Hindu Business Line : Corporation Bank to explore acquisitions

The bank's board, which met on Friday, passed a resolution authorising the Chairman and Managing Director to explore the possibility of acquiring other banks.

The board's decision had a positive impact on its share prices, with the scrip closing at Rs 267 on the BSE on Friday, higher by Rs 7 from the previous close.

The bank also wants to protect itself from any takeover bid. In a notice to the stock exchanges, the bank said that its board discussed the issue of consolidation of the banking industry and decided that the identity of the bank should be protected, particularly in view of its comfortable capital adequacy ratio (CAR) and its inherent strength.

Corporation Bank's CAR exceeds 20 per cent, compared to the statutory requirement of nine per cent.

"We would like to be the bridegroom rather than the bride," said Mr K. Cherian Varghese, Chairman and Managing Director, Corporation Bank.

The bank is in a comfortable position to finance the kind of acquisition it is looking for even after meeting the Basel II norms, Mr Varghese said.

The Government holds 57.17 per cent equity in this cash-rich bank. Among the non-promoters, LIC of India - its strategic partner - holds a sizeable 26.32 per cent stake.

At today's meeting, the board of directors of the bank also decided to go in for acquisition of credit portfolios of other banks in bulk to widen the asset base.

"In today's situation, organic growth for a bank would be slow. So, we have to resort to the acquisition route. We would also like to acquire assets of other banks, if they are of good quality and available at the right price," Mr Varghese said.

On whether Corporation Bank has identified any takeover target, he said that the bank has no proposal on hand as of now but will start the search soon.

"We will have to identify willing and suitable partners."

Corporation Bank, which is opening its 750th branch and ATM at Lower Parel in Mumbai on Saturday, reported a net profit of Rs 105.51 crore for the first quarter ended June 30, 2004.

Other public sector banks that have showed interest in acquisitions recently include Bank of Baroda, Indian Bank and Oriental Bank of Commerce.

More Stories on : Public Sector Banks | Mergers & Acquisitions

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