Icici Bank Seeks To Meld Parent Units

ICICI Bank has sought the Reserve Bank of India's (RBI) approval to convert 140 offices of both ICICI Capital Services and ICICI Personal Financial Services (ICICI PFS) into branches. ICICI Capital has 100 offices, with the remaining being accounted by the personal finance arm.

Both the subsidiaries, along with ICICI, are to be merged with the bank. Post-merger, ICICI Bank's branch network will increase by around 40 per cent. At present, the bank has around 400 branches and extension counters across the country. It had around a year back taken over Bank of Madura, which helped it increase the number of branches by around 260.

The merged entity will also merge ICICI's regional offices into its own offices. Around a year-and-a-half ago, ICICI Bank had changed its reporting structure to a three-tier structure of branch, regional offices and head offices. This was done for better co-ordination of its branches.

ICICI's six regional offices ICICI will be merged with that of ICICI Bank, which has 16 regional offices including Mumbai, Pune, Ahmedabad, Chennai and New Delhi.

In most of the cases, the office network of ICICI PFS and ICICI Capital is different from that of the bank's network. In cases where there may be an overlap of the office network, post-merger the branches can be reallocated, sources said.

Even in the case of Bank of Madura where there was an overlap with ICICI Bank branches in around 25 to 30 locations, the RBI had allowed the branches to be relocated. In around 8 to 10 cases, the branches were relocated outside the towns or cities.

According to market observers, if RBI allows ICICI to convert these offices into branches, ICICI Bank will have a better network across the country. This will also be better than taking over another private sector bank and that too at minimal cost.

At present, there is no overlap of functions between the two entities. ICICI Capital is into sales and marketing of retail liabilities, while ICICI PFS is into creating retail assets. ICICI Capital sells ICICI Bonds, fixed deposits and mutual funds. It is also into distribution of third-party products. PFS sells home loans, personal loans and auto loans of ICICI.