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| No need for fresh equity, says Andhra Bank CMD |
| Newswire18 / Mumbai Nov 20, 2009, 00:45 IST |
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State-owned Andhra Bank has enough capital and there was no need for government funds or follow-on public offer to meet its 20-25 per cent growth target for 2009-10 (April-March), Chairman and Managing Director RS Reddy said today.
“I have over Rs 4,000 crore of headroom available and retail lending is also picking up. So at the moment, I don’t need any fund from the government. Our aim for 20-25 per cent growth can be achieved without recapitalisation,” he said.
Reddy said the bank was capable of raising capital without diluting government stake.
At present, the government holding in the bank is 52 per cent.
 “A follow-on public offer is not possible at the moment as we have to ensure that government holding remains above 51 per cent. But with a healthy capital adequacy ratio and good profitability that we are reporting, there is no need for any public offer,” he said.
A merger with a larger bank or acquisition of a smaller bank was not on the agenda, Reddy said when asked about the government’s plan for consolidation in the banking sector.
Andhra Bank had received no intimation from the government to proceed on merger with another bank, he said.
“As of now, I am not aware of any such move. There has been no formal communication from any quarter to me. There is no move for a voluntary merger and any other merger depends on the process being initiated by the ministry,” Reddy said.
Reacting to media reports on recent meetings the government held with some banks over mergers, Reddy said he had not been called for any meeting with the government on the issue.
“We need to know what can be achieved by a merger, whether such a move is worthwhile and this cannot happen without a proper study. There are many issues relating to various stakeholders that need to be addressed. Mergers are not on my agenda at the moment,” he said.
Reddy said such sensitive issues that have wider ramifications must be done in a proper manner and “mergers should not be taken up for the heck of it”.
Reddy said it would be improper for him to comment on the stock price of the bank, but added market participants should gauge whether the stock was priced in line with the bank’s “good performance” over the last few quarters.
Shares of Andhra Bank today closed at Rs 113.35 on the National Stock Exchange, down 3.1 per cent from Wednesday.
“I am really bullish on our Malaysian joint venture with Bank of Baroda and Indian Overseas Bank, but the proposal has been delayed due to lack of regulatory approval from the Malaysian regulator,” he said.
In June, the three state-owned banks had announced their plan to set up banking operations in Malaysia and had since received the Reserve Bank of India’s approval.
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