Yes Bank, BoR plan subsidiaries

Yes Bank and Bank of Rajasthan (BoR) are the latest among private sector banks to walk the subsidiary path. Yes Bank is setting up a mutual fund arm to step up its wealth management business, while Bank of Rajasthan is setting up an insurance broking arm.

In fact, HDFC Bank is also planning a subsidiary to supplement its corporate banking operations, while Centurion Bank and UTI Bank are toying with the idea of setting up non-banking finance companies to offer discretionary portfolio management services to their wealth management clients and not merely restrict to investment advisory services.

A senior official of Yes Bank said: "Once we roll out our wealth management business, it does not make sense to sell only third-party products. We would like to sell in-house products named after the bank or the subsidiary subject to regulatory approval."

Yes Bank has already put in place team leaders for different categories of wealth management. The bank has now begun to recruit relationship managers and the entire service would be rolled out by January 2006.

In wealth management, Yes Bank has categorised its high networth clients into Yes Prosperity, Yes First, Yes Personality and Yes Private with networth of Rs 5-25 lakh, Rs 25 lakh-1 crore, Rs 50 lakh-1crore and Rs 5 crore and above respectively.

Bank of Rajasthan will seek the nod of its board soon to set up an insurance broking subsidiary in the next fiscal, a senior official of the bank said.

Yes Bank also plans to introduce asset classes such as art and real estate. "But we will pace our plans in tandem with changing needs of local customers," said the official.

In two to three weeks, Yes Bank will also start lending against shares, personal loans and mortgage loans. Initially, the bank plans to launch a floating rate product for mortgage loans.