Axis Bank to set up AMC subsidiary

Axis Bank has decided to set up a wholly owned subsidiary to enter the asset management business and will soon approach the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) for the necessary regulatory approvals.

It will also float a subsidiary for the trustee services business.

"Trustee business is currently conducted through the bank's book. These are largely debenture trustee services. To ensure that this business is kept at an arms length from the bank's books, we have decided to hive off the business into a different company.

"We have decided to diversify our lines of businesses after the bank's rebranding. The mutual fund venture will be 100 per cent owned by the bank,'' said P J Nayak, chairman and managing director.

Axis Bank, the erstwhile UTI Bank, underwent a name change a couple of months ago as the deadline for giving up the brand owned by UTI Mutual Fund neared.

According to a deal between the government and the fund's four sponsors, State Bank of India, Life Insurance Corporation, Bank of Baroda and Punjab National Bank, the nine entities floated by UTI Mutual Fund could use the brand name for free till January 2008, after which brand royalty was required to be paid.

The other entities floated by UTI Mutual Fund included UTI Securities, UTI Technology Services and UTI Investor Advisory Services.

UTI Mutual Fund had subsequently suggested that the bank could continue using the brand name beyond 2008, but wanted a non-compete clause and joint brand promotion.

The non-compete clause would have prevented the bank from launching its own asset management company.