AllBank weighs overseas option

Plans foray into derivatives, bullion trading

Allahabad Bank, which is set to make a foray into the international markets with the opening of a subsidiary in Kazakhstan in association with Punjab National Bank, is keen to expand to the economies such as the former CIS countries, Middle-East and South East Asia.

While PNB (with a 60 per cent share) and Allahabad Bank (with a 40 per cent share) have formed a joint venture subsidiary that is expected to begin operations in the next few months, Allahabad Bank has also filed and application with the RBI for opening of a full fledged bank in Hong Kong and a representative office in China.

"We expect to receive the licence from the Kazakhstan authorities anytime now. The joint venture will invest a sum of Rs 100 crore in the subsidiary. However, the bank is not keen on exploring the US or western European countries for overseas expansion. Instead, we are looking at emerging economies for our overseas expansion plans," said Allahabad Bank executive director S K Goel, in Ahmedabad in Thursday.

Goel added that in the next six months, the bank will have a fair idea whether the joint venture route is more profitable or opening up of a subsidiary is more viable, in the process of overseas expansion. "The Kazakhstan foray is our first overseas expansion.

"Once we have a fair idea, the bank will adopt a strategy, but for the moment though , the JV route appears to be more preferable for the bank," the Allahabad Bank ED said.

Goel told Business Standard said that apart from tie-ups for cross selling of life insurance products, general insurance products, mutual funds and a tie-up with Export Credit Guarantee Corporation, Allahabad Bank is also looking to enter into the bullion and derivatives trading.

"We are in talks with several entities at the moment, but it would be too early to name anyone, as no partner has been finalised as yet," Goel said.

He said that a deal is likely to be made in the next two months or so regarding bullion trading and derivatives trading.

"Cross selling of products accounted for about Rs 50 crore income for the bank this year, and the partnership with Life Insurance Corporation was the most fruitful," Goel said.