Bank of India to open subsidiaries overseas

Bengaluru: Bank of India plans to acquire small-sized or mid-sized banks in African countries, New Zealand, and Canada. The bank is also looking at the organic route in other countries, said a top official.

“We are shortly opening subsidiaries in New Zealand, Canada and a few countries in Africa. We want to consolidate in countries where there are opportunities,” Mr N. Seshadri, Executive Director, Bank of India, told Business Line. Explaining that the RBI also advocated the subsidiary route for overseas locations, he said that the bank plans to acquire small-sized and mid-sized banks in these countries.

“If at a reasonable size we can acquire and grow inorganically, we could do that,” he added. The bank is currently present in 18 locations with over 30 branches. The bank already has permission for setting up operations in Botswana, and would actively pursue the inorganic route for this country.

According to industry estimates, a small-sized bank in the African continent would typically have 5-6 branches and could be acquired at anywhere between $5 million and $10 million. Though a location like New Zealand could be expensive , “it would add a lot of value and make business sense, since we can cover Australia too. Both the countries have a substantial Indian population,” pointed out Mr Seshadri. The bank also plans to convert its representative office in Johannesburg, South Africa, into a branch, he said.

In order to grow its balance sheet and augment future credit needs, Bank of India is looking at raising funds in the first half of the next fiscal. The bank had recently raised $750 million through the medium-term note (MTN) route and also expects about Rs 1,000-crore capital infusion from the government. With this infusion, the government holding in the bank would go up to 66 per cent from the current 64 per cent.

In addition to this, “we would also be raising additional capital in the first half of this fiscal, though we have not firmed up our budgeting plans yet,” said Mr Seshadri. As an international bank, he pointed out that Bank of India is required to maintain a tier-I capital of 8 per cent, and “there is enough headroom available in tier-II also,” he added, indicating that a dual issue is possible.