Uco Bank open to merger with bank in south

Kolkata-based Uco Bank is looking at a merger with a strong bank, preferably in the south.

The bank is in talks with a clutch of consultants and will engage one of them for merger and acquisition (M&A) advisory services, said V P Shetty, chief managing director, Uco Bank.

Consultant A T Kearney is currently conducting a strengths, weaknesses, opportunities, threats analysis of the bank and will submit a report soon. It is also in the race for the job with its M&A advisory services.

"Our bank's network of 1,730 branches is strong in the north and east, and we are not weak in the west. A bank in the south would be ideal for us. The bank is slated for a giant leap, not just organic but also inorganic growth. In terms of locations, our branches are among the best after the State Bank of India," said Shetty on the sidelines at a press conference held here on Monday to announce its distribution tie-up with UTI Mutual Fund products.

Shetty is one of the few bank chairmen to state that he is open to being acquired rather than acquire another bank. Most of the bank chiefs see themselves in the role of an acquirer.

Uco Bank is in discussions with the government to convert part of its equity into preference capital.

"We have a bloated capital of Rs 799 crore. It's a tough task servicing this capital. We are in discussions with the government to convert a portion of it into preference capital with a lower coupon rate."

While Shetty ruled out an equity issue in the near future, the bank is to raise Rs 250-300 crore of tier-II capital. The coupon rate of the issue will be finalised in the next few days while the tenor is 7-10 years. Uco Bank has a total business (assets plus liabilities) of Rs 65,000 crore and aims to grow it to Rs 1,00,000 crore by 2007.

"We are growing at 20 per cent per annum and will touch Rs 75,000 crore by the end of this fiscal," he added.