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Saturday, Nov 12, 2005


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Money & Banking - Mergers & Acquisitions

Talks in final stages to acquire NHB's stake in housing finance co: BoB chief

Our Bureau

Kolkata , Nov. 11

BANK of Baroda (BoB) is in final stages of negotiations with the National Housing Bank, its partner in BoB Housing, to take over NHB's holding in the housing finance company.

The bank, which proposes to merge BoB Housing, has recently worked out the valuation. NHB currently holds about 30 per cent in the company which has a portfolio of about Rs 500 crore.

The BoB Chairman and Managing Director, Dr Anil Khandelwal, said the bank has kept the housing finance outfit in nearly a latent state for some time.

"The merger has been planned keeping in view the need to increase our efficiency," he added.

The initiative with regard to BoB Housing is part of the bank's plan to recast its subsidiaries. Already, it has capitalised BoB Cards, the credit card venture, while efforts are on to rejuvenate BoB's asset management arm as well. The latter is known to have only a limited asset base, spread over a handful of schemes.

The card outfit, Dr Khandelwal said, recently saw a Rs 80-crore capital infusion, and more positive news may be expected on this front. BoB Cards, incidentally, was among the pioneers in the country.

As for the mutual fund, the BoB chief is of the view that "dynamic steps" will be required to bolster its operations. "We will have to take a call on the matter," he said, adding that no concrete restructuring proposal is under consideration at the moment.

The fund recently mooted an open-ended equity scheme - Baroda Global.

As for raising capital, BoB still has a headroom of about Rs 2,200 crore; it has recently raised Rs 750 crore by way of Tier-II issue. The bank, which has a business of about Rs 1,35,000 crore, recorded roughly 15 per cent growth in credit for the first half, it is pointed out.

A follow-up equity issue has now been lined up. Post-issue, BoB will see the government's holding in it come down to 53 per cent (from 66 per cent). Its CAR now stands at 12.87 per cent.

The bank, which sets great store by retail lending, hopes to leverage MoneyPlex, its new brand to promote retail products. About 50 MoneyPlex points have already been opened.

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