Federal Bank To Convert Arm Into Broking Unit

Federal Bank has decided to convert the Federal Financial Services into a shell company and later to convert it into a broking subsidiary, providing an e-trading platform to the customers.

Stating this, the chairman of the bank, K P Padmakumar, said the bank has approached the Reserve Bank of India and the Kerala High Court for approval.

Federal Bank has already paid back the deposits to investors and, on the asset side, has stopped funding new projects. It has also sought government approval to transfer the assets of the finance company into the books of the bank.

He said the bank was very keen on providing trading facilities to its customers and thus was also open for strategic alliances till such time the subsidiary was operational. "Federal Bank is also considering to enter into a strategic alliance with ICICI for e-trading, and talks are on with the institution on this issue," said Padmakumar.

 

ICICI hold 21 per cent equity stake in the bank since 1993. According to Padmakumar, "As per the agreement, ICICI's stake could be increased anytime in future, although no such plans are on for the near future."

Amidst speculation about mergers in the banking industry, Padmakumar has ruled out Federal Bank's merger with any other bank "even in the southern region, a strong base for Federal Bank."