ICICI Bank has changed its stand with regards to its holding in Federal Bank and South Indian Bank and is now open to divesting its stake in both the banks.
"In the post-merger era at ICICI, we see our holding in both these banks as financial investments and we will go strictly by that consideration. If we find the value of investment in these two banks falling we are open to disposing of our stake," Kalpana Morparia, executive director of ICICI Bank Ltd, said.
Till some time back, ICICI Bank was against the idea of divesting its stake in these two banks and still holds 22 per cent in South Indian Bank and another 12 per cent in Federal Bank, which ICICI has been holding before ICICI Ltd and ICICI bank merged.
"ICICI is, however, under no compulsion with respect to offloading the stake in these two banks. The Reserve Bank of India never asked us to do so and we will take a decision based on our investment profitability in these two entities," explained Morparia.
Meanwhile, Federal Bank has decided to actively pursue the merger & acquisition route to attain the critical balance sheet size and a 16 per cent capital adequacy in 2004-05.
Federal Bank was on the lookout for another institution with strong presence in other parts of the country that have exactly the same kind of profile that it has in southern India. The bank is also considering a round of Tier-I capital raising exercise at a latter stage. South Indian Bank is also on a similar path.
Meanwhile, ICICI Bank has targeted a total Rs 75,000 crore (Rs 750 billion) business in 2003-04 of which around 45 per cent at Rs 35,000 crore (Rs 350 billion) will be from the retail sector.
The bank is also heavily into selling off securitised portfolio and has sold around Rs 2,500 crore (Rs 25 billion) of loans in the first quarter of the current fiscal of which Rs 200 crore (Rs 2 billion) was mortgaged backed securities and another Rs 100 crore (Rs 1 billion) of personal loan portfolio.
"With a large network of branch offices we have developed a strong expertise of originating retail business assets and servicing them. It makes sense for us to acquire the business and sell a portion of it to others," Morparia explained.
Earlier in the day while delivering a lecture on the 'Future of project financing' at 'Banking East' organised by the Confederation of Indian Industry, the executive director said that the infrastructure sector in India was poised for a huge leap and ICICI Bank was looking at opportunities of funding in the sector.
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