The Hindu : Business : Vijaya Bank looks at acquisition for growth

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Thursday, Feb 07, 2008
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Vijaya Bank looks at acquisition for growth

Special Correspondent

To pull out of venture with PNB
Rules out any cut in interest rates

— PHOTO: H. SATISH

NEW LOOK: Prakash P. Mallya (right), Chairman and Managing Director, Vijaya Bank, inaugurating the bank’s renovated branch at Bahseerbagh in Hyderabad on Wednesday.

HYDERABAD: Vijaya Bank is looking for acquiring another bank with a large presence in western and northern India, though it has not zeroed in on any candidate as yet. The bank will pull out of the joint venture it has with Punjab National Bank (PNB) for floating an insurance company.

Business target

It is also targeting a business of Rs. 1 lakh crore by 2010. While it has raised a Tier-II capital of Rs. 200 crore three weeks ago, it still has a headroom to raise another Rs. 1,900 crore, a portion of it is likely to be through a public offer.

Addressing a press conference after inaugurating a renovated branch at Basheerbagh here on Wednesday, Prakash P. Mallya, Chairman and Managing Director, ruled out any cut in interest rates immediately. He foresaw reduction in interest rates by April-May this year. As of now, Vijaya Bank’s interest rate was the lowest (9.5 per cent) on housing loan, even the slashed rates by many banks were higher than that of his bank.

“I can tell you that bank rates will not go up beyond this,” he said.

Branch expansion

Mr. Mallya said the bank, which had 1,008 branches, decided to open 1,050 branches and increase the number of ATMs from 202 to 350 by the end of the current financial year. It targeted a net profit of Rs. 450 crore by the end of the fiscal and a total business of Rs. 76,000 crore. He said 65 per cent of the branches were under core banking solutions which were contributing to 92 per cent of the bank’s business.

It had 414 branches in Karnataka, while the remaining were spread across the country.

He favoured consolidation of banks and the total number should boil down to six or seven in all.

The bank found the joint venture with PNB incompatible, hence the pulling out which would happen by March 31.

A consultant was appointed to work out alternatives.

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