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Canara rules out private bank buyouts

BS Bureau

Canara Bank has ruled out acquisition of private sector banks to grow its business in the western region of the country.

Chairman and managing director R J Kamath, who laid down office today said private banks do not have the wide network of branches which was an essential requirement for Canara Bank.

He said if the bank has to increase its business to the targeted Rs 1,050 billion, it has to expand its network in Maharashtra and Gujarat. "We are strong in the south and north but we need to increase our base in the west, which can only be done through acquisitions," he said.

Kamath said the bank should continue to focus on retail banking as it was its main strength. He said the bank had a strong presence in semi-urban and urban areas in Karnataka and Tamil Nadu where nearly 50 per cent of the total number of branches exist.

He said the bank is in talks with a few insurance majors to sell their products. The bank has already ruled out its entry into the insurance sector.

During Kamath's tenure, total business of the bank crossed Rs 870 billion, while foreign business turnover of the bank is estimated to aggregate over Rs 600 billion by March 2001. It added Rs 110 billion to its deposits' portfolio, while net NPAs to net advances ratio is expected to be around 4 per cent during 2000-01 compared with 5.29 per cent during the previous year.

Kamath also initiated the voluntary retirement scheme which saw around 8,000 employees opting for the scheme.

Canara Bank has set itself a target of crossing Rs 1,050 billion by March 2002 in business.

In a major revamp of its structure, the bank recently embarked on the rationalisation of its branch network, which includes closure and merger of branches and opening up of satellite offices.

The bank decided to merge 70 branches and rationalise around 250 loss-making branches in an attempt to improve operational efficiency and profit earning capacity of branches.

The bank is also spinning of business of a branch, such as government business, SSI and industrial finance, for improved efficiency of operations and split branches within the same centre because of space constraint for better customer service. The bank has also decided to upgrade extension counters into full-fledged branches and convert specialised branches into regular branches.

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