Yes Bank may go for an acquisition in securities broking business

Yes Bank is likely to go for an acquisition in its securities broking business. Last month the bank received the Reserve Bank of India’s (RBI) approval to foray into this business.

“We have some very attractive opportunities for inorganic growth and let us say that it is under consideration. The team at Yes Bank is evaluating it but it is too early to comment at this stage,” said Rana Kapoor, Managing Director & CEO, Yes Bank. “Retail broking is an area of thrust and we have no desire to be an institutional broker. We will build this as a complimentary product offering,” Kapoor said.

The bank expects to launch operations of the securities broking business during FY14.

The bank on Tuesday also received a board approval to get into retail mutual funds. “Yes Bank shall be applying to the RBI and Securities and Exchange Board of India for getting into it and we will hopefully in the next 12 months get into the business of mutual funds. Here again the rationale is to augment our retail offerings,” said Kapoor.

However, insurance business is a proposition that Yes Bank believes is best played as a distributor. “We do not want to take on the capital burden and at the same time the manufacturing costs. I think we will be a better distributor than a manufacturer,” said Kapoor.

For an acquisition in securities broking business, cost will be a major consideration. “Our plan A is to do it on our own because it is not too expensive. All we need is a technology platform and then we will empower our branches to sell. By going inorganic it helps us to short-cut the process. Price is a major criteria,” said Rajat Monga, group president- financial markets and chief financial officer, Yes Bank. “ As a bank we believe that our strength is to build businesses not to buy businesses. There are so many businesses within the bank and each of them have been build by us. We should not be paying a great price in any case in this environment,” said Monga.