BoB in restructuring mode -forays into insurance sector

Mumbai, Apr 5 (UNI) Leading public sector banking major Bank of Baroda (BoB) is on a restructuring mode with forays into the lucrative insurance sector and capital infusion with joint venture (JV) explorations.

BoB plans to restructure three of its subsidiaries even as it seeks to give a strong impetus to its retail banking operations over the next two years. The bank will also foray into the high-potential life insurance business within the next three months while plans are being fine-tuned for a tie-up with a stock-broking firm within the next six months.

''Our top priority presently is to recast our subsidiaries and we plan to complete the restructuring by the end of this fiscal (FY 07),'' Bank's Chairman and Managing Director A K Khandelwal said here today.

The three subsidiaries are BoB Capital, BobCards, its credit card subsidiary, and BoB AMC, its mutual funds arm.

The bank has already completed recasting its housing finance subsidiary, BoB Housing, by merging it with the bank. ''We will use the 25 offices of BoB Housing now available to us not only for our housing finance business but also to drive our retail banking business,'' Mr Khandelwal informed.

According to him, restructuring of the bank's subsidiaries could involve issues like capital infusion, exploration of JV possibilities and strengthening their operational efficiencies.

''Our subsidiaries have not performed as well as they should have and hence our action to recast them. We will look at all issues such as capital, skill-sets of our personnel, products portfolio, building up of domain knowledge, etc,'' Mr. Khandelwal said.

BoB, whose total business in FY 06 was to the tune of Rs 1,55,000-crore, has recently appointed management consultancy company, McKensie, to advice it on business transformation strategies.

The bank is now specially focussing on its western Indian operations. ''where we are the strongest but where the competition is also the maximum,'' Mr. Khandelwal said, adding that the bank was devising strategies to retain its leadership position in the region in terms of new products, tie-ups, positioning, and operational efficiencies.

BoB is also fine-tuning its plans to give a strong thrust to its retail banking business and aims to up its retail banking portfolio to 25 per cent from the present 18 per cent in the next two-year period.

''An important focus area will be the smal and medium enterprises (SME) segment,'' Mr. Khandelwal informed, adding that the bank has appointed a person of the rank of deputy general manager to oversee the bank's SME business.

BoB has also performed well on all crucial parameters in FY 06 with deposit growth over 16 per cent, savings accounts growth over 19 per cent and over a 50 per cent growth in agro advances. Its capital adequacy ratio (CAR) stood at a healthy 14 per cent and the bank was targeting a credit growth of 25-to-30 per cent this fiscal, Mr.

Khandelwal said.

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