Bank troika forges card, foreign venture plans

Oriental Bank of Commerce, Indian Bank and Corporation Bank, which recently formed a strategic alliance (OIC), will set up a credit card venture. The three banks will also set up a common subsidiary overseas.

The CEOs of the three banks met in Chennai last week to formulate a three-stage action plan. They are likely to give a formal shape to their initiative by signing a memorandum of understanding (MoU) in the second week of November.

But even before the MoU is signed, the three banks are set to kick off their common business programme by selling gold coins in the Capital next week under the OIC umbrella. The alliance is also working on a common logo and slogan to market their products.

"The credit card subsidiary will be floated in the second phase after signing the MoU. In the first phase, we are setting up a few working groups to give shape to the new business strategy," an OIC spokesperson said.

In the third phase, these banks will set up common representative offices in China, Indonesia, Vietnam, Russia and Brazil, and float an overseas subsidiary.

The move is expected to help all three banks expand their remittance business and fund overseas acquisitions on the lines of corporates.

At present, only Indian Bank has an overseas presence with an office in Singapore. In addition, the banks will also explore a common strategy for commodity trading and capital market-related businesses.

An executive committee consisting of the three executive directors of the banks is drawing up the road map for alliance businesses.

This committee will approve products and fine-tune revenue-sharing arrangements. Besides, working groups have been set up to focus on areas like payment, treasury, credit cards, capital markets, knowledge centre for risk management, and also for putting in place products and operational guidelines.

Of the three banks, only Indian Bank currently offers a credit card venture. The credit card venture is part of OIC's immediate focus on payment products.

"All three banks have different kinds of payment products at different stages of progress and hence it is easy to take these to their logical conclusions. We will look at offering payment products in the next two months," the OIC spokesperson said.

The alliance plans to leverage the acquirer's business by rolling out point-of-sale terminals across the country. "We are conceptualising a common information technology backbone and shared delivery channels, including ATMs and point-of-sale terminals. In the next one-and-a-half years, we will set up 60,000-70,000 point-of-sale terminals," the spokesperson added.

The combined asset base of the alliance partners is over Rs 1.5 lakh crore. They have a 33 million customers, 3,600 branches and 1,800 ATMs.