Syndicate Bank plans to float insurance marketing arm

Syndicate Bank will set up a wholly owned subsidiary for marketing general insurance products.

The bank, which already has a tie-up with Allianz Bajaj for distribution of life insurance products, will finalise the formalities of the subsidiary by March.

Syndicate Bank chairman and managing director Michael Bastian said, "Under the existing framework, a nationalised bank can have tie-up with only one insurance company. As we already have Allianz Bajaj as our partner, we felt the need for a subsidiary to extend the scope of our insurance marketing business."

The bank is likely to tap the market with Tier II capital issue for Rs 125 crore to augment the capital resources to meet credit expansion according to its business plan.

It had recently strengthened its capital adequacy through Tier II bonds for Rs 100 crore.

Bastian said the bank is in the process of starting a special leave scheme for its employees for a period of two to four years with 25 per cent of the gross last pay drawn.

"We expect around 2,000 of our employees to opt for this scheme and we will save up to Rs 50 crore in establishment expenses in a year. These employees can also enrol to sell our insurance products during this period," he said.

The bank, which reported a 25 per cent increase in its net profit to Rs 305 crore for the nine-month period ended December 31, 2003, is looking at achieving a total business of Rs 86,000 crore by March 2005 from the current business of Rs 55,038 crore.