IOB plans to acquire Pune cooperative bank

Chennai-based Indian Overseas Bank (IOB) plans to acquire Shree Suvarna Sahakari Bank, a Pune-based cooperative bank. The board of directors of IOB has given principle approval for the takeover at its meeting held on March 29.

Speaking to the Business Standard on Monday, IOB Chairman and Managing Director S A Bhatt said the acquisition would help the bank establish its presence in the western parts of the country. "If IOB wants to start branches, it will take another four to five years. Expanding through an acquisition would be easier," Bhatt said.

Bhatt added that it would take 6-7 months to complete the acquisition. "This acquisition is a test process, if this model becomes successful we will go in for more acquisitions."

The Pune-based bank did total business of Rs 1,200 crore during the current financial year. Total liability was around Rs 700 crore and assets at Rs 500 crore. Currently, the bank has 12 branches in Mumbai and Pune, Bhatt said.

This will be the second acquisition for IOB during the last quarter of the current financial year. In February, IOB had entered into a joint venture with JM Financial to acquire a minimum 10 per cent of the paid-up capital amounting to Rs 210 crore in the asset reconstruction company promoted by JM Financial. The said plan is subject to approval from the Reserve Bank of India.

Two or three public sector banks and high net worth individuals are likely to participate in the venture.