Indian Bank, the Chennai-based public sector bank, is planning to restructure its subsidiaries by bringing in strategic partners and reverse mergers. The company has three arms for its mutual fund, merchant banking and housing loan businesses.
Speaking to Business Standard after announcing its quarterly results at Chennai on Saturday, T M Bhasin, chairman and managing director of the bank, said it was planing to restructure its three subsidiaries — Indbank Merchant Banking Services, Indbank Mutual Fund and Indbank Housing.
For the mutual fund and merchant banking arm the bank is planning to bring strategic partners, while housing arm is likely to be merged with the Indian Bank.
“We are in discussion with three major foreign players for our mutual fund business,” said Bhasin. He refused to disclose the names. Initially one partner will be roped in. Following the success of the partnership and the business model, we will consider another partner, he said.
A S Bhattacharya, executive director, added that in September the deal is expected to be signed and in October or December operations will start. Indian Bank Mutual Fund (IBMF) was formed as a trust during 1990, sponsored by Indian Bank with a corpus of Rs 25 lakh.
The schemes of IBMF were managed by the Trust during 1990-1994 and in 1994, Indfund Management (IFML), an asset management company was formed and IBMF launched 12 close-ended schemes and raised Rs 627.10 crore. Out of the 12 schemes, nine schemes were redeemed on maturity dates.
Three schemes — Ind Navratna, Ind Shelter and Ind Tax Shield — were transferred to Tata Mutual Fund in November 2001, according to the information available on the bank’s website.
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For Indbank Merchant Banking Services Limited, a merchant banking and allied services division of Indian Bank, new partners will be roped in.
The division reported an earning of Rs 19 crore and a before tax profit of Rs 2.3 crore last year. After adjusting the previous year’s losses, the net loss stood at Rs 1.6 crore.
For 2008-09, the company earned Rs 9.8 crore and a net loss of Rs 7.22 crore. Apart from merchant banking activities the company is also into stock broking and a depository participant.
Indian Bank holds 64.84 per cent of the Rs.44.37 crore equity of the Indbank Merchant Banking and the balance is held by public and institutions.
While the two subsidiaries will be revived , the third one — Indbank Housing — will be merged with the parent, said Bhasin. The company was jointly endorsed by Indian Bank and Hudco.
The Bombay Stock Exchange company has Rs 10 crore equity and earned Rs 2.4 crore income and posted a net loss of Rs 1.6 crore last year. “After write off, Indian Bank will get a housing loan portfolio of around Rs 76 crore,” Bhasin added.