Hdfc Bank Chief Says Acquisition On Agenda

HDFC Bank is on the prowl. After successfully completing its $172.5 million American depository share (ADS) issue last month, the bank is looking at acquisitions.

"I am open to acquiring a bank provided it is available at a reasonable price, has retail assets and does not have non-performing assets (NPAs). Besides, it should not be a regional player," said HDFC Bank managing director Aditya Puri.

"We are not in discussions with any bank at the moment," he was quick to add.

According to sources, the potential takeover targets could be south-based old private sector banks such as Dhanlakshmi Bank and Karur Vysya Bank besides new generation Global Trust Bank.

HDFC Bank had taken over TimesBank more than a year back. "Initially, the bank needed the scale and I got it after the merger. HDFC Bank is adding around 50 to 60,000 customers every month. It is also increasing the branch and ATM network across the country. The bank is growing at a rate of 30 to 35 per cent and a takeover is not a necessity," said Puri.

The bank is also looking at takeover of retail and corporate portfolios of other banks. "We have already picked up debentures from foreign banks," said HDFC Bank's country head corporate banking Samir Bhatia.

According to observers, some of the foreign banks would have to offload their portfolios to conform to the recent Reserve Bank of India guidelines on exposure norms. "HDFC Bank, with a strong capital base, could pick up these assets to grow its balance sheet. Also portfolios of some of the foreign banks who are exiting out of India are now available," said a market observer.

According to market sources HDFC Bank would go in for an acquisition in three to six months. "Most of the banks which are potential takeover targets are focussed at the mid-market corporates. These banks would be affected due to the down-turn in the industry, thus affecting their valuations. It would rather prefer to wait and watch the scenario than jump into any acquisitions. It would look at a bank with a reasonable technology as it will not have to spend on training the staff," said sources.

After the break-up of the merger of UTI Bank and Global Trust Bank, banks do not want to rush into any acquisitions.

According to analysts, HDFC Bank is most likely to use the share swap route for a takeover. Its scrip closed at the Bombay Stock Exchange at Rs 235.95.

GTB had before its intended merger with UTI Bank approached HDFC Bank. According to sources, HDFC Bank could possibly look at GTB after a few months as GTB is currently cleaning up its balance sheet. However, ultimately it will depend on whether Ramesh Gelli intends to sell the bank or not.