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Saturday, Sep 16, 2006

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Three PSBs ink pact for strategic collaboration

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"WE ALSO COMPETE": Dr K.C. Chakrabarty, Chairman & Managing Director, Indian Bank, Mr K.N. Prithviraj, Chairman & Managing Director, Oriental Bank of Commerce, and Mr B. Sambamurthy, Chairman & Managing Director, Corporation Bank, at a press conference in Mumbai on Friday. — Shashi Ashiwal

Mumbai , Sept 15

Oriental Bank of Commerce (OBC), Indian Bank and Corporation Bank today signed an alliance to share business.

The Memorandum of Intent (MoI) will cover e-payment systems, sharing of IT infrastructure, training, ATMs, treasury resources, loan syndication, capital market and international forays.

Banks cannot yet share bank accounts or cash transactions through branches, as each bank is a separate legal entity.

Dr. K.C. Chakrabarty, Chairman and Managing Director of Indian Bank, said: "Technology upgradation is costly. Skill acquisition is becoming difficult, due to which we are unable to leverage branch networks. This way we can compete in a competitive environment."

Mr K N Prithviraj, Chairman and Managing Director of OBC, said: "The identity of each bank and its employees will be maintained."

Mr B. Sambamurthy, Chairman and Managing Director of Corporation Bank, said: "While we collaborate we also compete."

Being an alliance, there is no need for regulatory approval from the Reserve Bank of India, the bank chiefs jointly told newspersons.

Though there is no special provision of a `no compete' clause, they said that there would not be any poaching of staff.

The joint market share of the three together will not cross five per cent.

Also, they did not rule out the possibility of more banks joining up.

On the BSE today, the shares of Corporation Bank closed at Rs 358.25 (Rs 351.45) while OBC ended at Rs 226.5 (Rs 223.85).

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