BOB Capital Markets (BOB Caps), a wholly-owned subsidiary of Bank of Baroda, will start e-broking services, an online trading platform, and regular broking facilities to predominantly cater to 33 million customers of its parent bank.
BOB Caps expects to start operations by March-end.
At present, the public sector bank has a tie-up with India Infoline for e-broking. The alliance was formed in January 2007. BOB Caps is also exploring the possibility of transforming this alliance into a separate joint venture to offer end-to-end wealth management services.
The other public sector banks active in the e-broking segment, either through subsidiaries or via affiliations with brokers, include IDBI Bank, and State Bank of India. “BOB Caps is into merchant banking and the management has decided to commence e-broking and broking activity so as to enable the bank to provide all financial services under one roof,” a senior company executive said.
BOB Caps has been in merchant banking and distribution of mutual fund products to institutions for a while now. However, with the sharp downturn in the stock markets since January 2008, the work associated with managing initial public offers (IPOs) has declined sharply.
The capital market arm is working on building IT systems and infrastructure and has already appointed individual consultants to chart the roadmap for broking activity and prepare a business plan for next three to five years. The recruitment of additional staff in merchant banking, broking and the back office is also underway.
The approval for broking membership with National Stock Exchange and Bombay Stock Exchange is already in place. “We are awaiting clearance from the Securities and Exchange Board of India, which is expected shortly,” he added.
The broking services would cover equity as well as debt market segment. It would, however, not provide the platform for currency derivatives since BOB’s treasury branch, which has expertise in this area, already provides the facility.
The company may provide portfolio management services and start commodity trading at a future date.
Asked if the bank was likely to end its arrangement with India-infoline, the executive said the parent was likely to take a call on the alliance when BOB Caps is ready with its e-broking platform early next year.
BOB Caps posted a net profit of Rs 8.42 crore in 2007-08 while its net owned funds stood at Rs 102.37 crore.