AllBank Finance to offer merchant banking services

AllBank Finance Ltd, the non-banking finance subsidiary of Kolkata-based Allahabad Bank, will be starting its merchant banking operation shortly.

O N Singh, chairman and managing director, Allahabad Bank, said, "We have already received the licence for offering merchant banking services and will start operations in the next three-four months."

He was speaking to mediaperson on the sidelines of the bank's annual general meeting on Sunday. Singh added, "We are currently searching for a chief executive officer (CEO) to run the merchant banking operations based in Mumbai." The operation would be in line with SBI Capital Markets, Singh explained.

Meanwhile, about a subsidiary in Kazakhstan, Singh informed that the bank was on the look out for buying a local bank in Kazakhstan.

"The target bank has not yet been finalised. The initial capital base of the joint venture will depend on the acquisition but the figure could be around $15 million," Singh said.

The Punjab National Bank will be holding 60 per cent stake in the JV, whereas the remaining stake will be held by Allahabad Bank.

On the other hand, the bank is awaiting clearance certificate from Japanese regulator Financial Services Agency (FSA) before signing a shareholder agreement with Sompo, the proposed foreign partner in the general insurance foray of Allahabad Bank along with three other Indian players- Dabur, Karnataka Bank and Indian Overseas Bank.

"We have already signed memorandum of understanding with Sompo. We are awaiting a clearance certificate from FSA after which we will sign shareholders agreement," Singh said.

Meanwhile, several other international players have started showing interest to be a part of the consortium. "Ernst & Young is looking into the matter," said Singh.

Referring to the closure of Industrial Investment Bank of India (IIBI), Singh who is also the chairman of the bank, said that it will cause a loss of Rs 500 crore to the government ex-chequer.