Bank of India in talks to buy Indonesian bank

Bank of India (BoI) has emerged as the second Indian bank, after State Bank of India, to look overseas for acquisitions.

M Venugopalan, chairman and managing director, today said the bank was eyeing a small private bank in Indonesia and was also looking to fund its overseas operations through medium-term notes issue in the coming fiscal.

"We are talking to two Indonesian banks now. We are looking at acquisitions in Indonesia as otherwise there is high capital requirement to set up a branch. We would need a $100 million to open a branch. Hence, the acquisition model is a preferred route," Venugopalan said at the sidelines of a press conference to launch the bank's Visa international gold credit card.

Venugopalan is set to retire on April 30, 2005. The country's largest commercial bank SBI is also looking to acquire a small or medium size bank in Asia and Africa. It is expected to make an announcement before the fiscal end.

"We may look at a medium-term notes issue of $200-300 million with a maturity of five years in the coming fiscal if the rates are favaourable. We want a rate of 85-90 basis points over London inter-bank offered rate," he said. SBI recently raised $ 400 million through a medium-term note issue at 77 basis points over Libor.

Bank of India also plans to open branches in Antwerp, Belgium and Shenzen, China in this fiscal. On the drawing board are subsidiaries in Canada, Tanzania, a branch in Bangladesh and representative office in Myanmar, the CMD added.

BoI is present in 12 countries either through branches or representative offices and foreign operations account for about 20 per cent of its balance sheet.

On the domestic front, Venugopalan said: "We are not averse to mergers and acquisitions, but there is nothing specific as of now. We would look at a merger of equals. The synergies we would look for would be size, business expertise area and geographical reach."