IOB mulls alliance with foreign, pvt banks

Chennai-based Indian Overseas Bank (IOB) is considering forging an alliance with foreign and private banks to reach markets outside its network and venture into the sophisticated structured products market.

The alliance could be a precursor to a possible consolidation in the future.

"We are thinking of entering into an alliance with banks, which will help us to expand our reach in regions where our presence is small and give us the knowledge and expertise in areas such as derivatives and structured products," chairman and managing director S A Bhat told reporters on the sidelines of IBA-FICCI banking conference.

The public sector bank expects to crystalise plans for a tie-up by end of the financial year. "We have a small presence in Maharashtra and Gujarat and will like to step up our reach", he added.

While admitting that some banks had approached IOB for an alliance, Bhat emphasised that nothing had been finalised. The idea was to form an alliance on lines of the partnership between Oriental Bank of Commerce, Indian Bank and Corporation Bank.

The three public sector banks had signed an agreement over a year ago, but the alliance did not take off. Two of the banks, Indian Bank and Oriental Bank, have undergone changes at the helm.

"This (alliance) could be a step towards merger and acquisitions, when the Indian financial sector is opened up further", Bhat concluded.