OBC looking to acquire a South-based bank

Five years after acquiring the Hyderabad-based Global Trust Bank, state-owned Oriental Bank of Commerce has begun the hunt for another lender to expand its footprint in South India.

The bank has a strong presence in the Northern region. To strengthen its position in the South, OBC would go in for inorganic growth if some good opportunity come up, a senior bank official said.

“We are a strong bank. We can take over a South-based bank having synergies to expand business in the region,” the official said. In 2004, OBC acquired Global Trust Bank, which helped establish its footprint in South India. OBC merged about 100 branches of GTB as part of an amalgamation process, along with non-performing assets of Rs 1,362 crore at the end of March 2004.

Asked how the bank would fund the acquisition if it happens, the official said the capital adequacy ratio (CAR) is close to 13 per cent, and given the balance sheet size, it could raise further capital through bonds. The CAR is the amount banks keep aside against various risks.

In a bid to strengthen its CAR, OBC raised Rs 300 crore from bonds during the month. The bank has also requested the government for capital support of Rs 1,000 crore for the credit growth in the coming years.

OBC has a licence to open 117 branches across the country in the current financial year. Focusing on semi-urban and rural areas, the bank aims to have a network of 1,500 branches by the end of March 2010.

Also, the bank plans to expand its network, opening around 200 new branches annually in the next three financial years. OBC currently has 1,429 branches in the country, apart from 59 extension counters, with 891 ATMs.

The Delhi-based bank opened a representative branch in Dubai in March this year, making its overseas presence for the first time after being established in Lahore in 1943.