Allahabad Bank board to consider consolidation plan

Allahabad Bank's board is scheduled to meet in the next fortnight to initiate the process of consolidation by the beginning of next fiscal.

O N Singh, chairman and managing director, at a press conference in Kolkata on Tuesday, said the bank would take up the consolidation exercise in the next fiscal where it would look for geographical synergies with banks situated in western and southern India.

"We will also consider activity synergies on fronts such as fee-based activities and areas in which the bank lacks at present," he added.

"The synergy would primarily look for creation of better value and the process will also look at creating presence in different orbits," he added.

Meanwhile, the bank's shareholders today passed a proposal to allow the bank to raise additional Rs 100 crore through a book building issue by the middle of February.

"We would finalise our merchant bankers for the issue in the next couple of days following which we would apply to the Securities Exchange Board of India," he added.

The bank has also decided to reserve around 10 per cent each of the issue for its shareholders, employees and non-resident Indians. Talking about the pricing of the issue, he said it would be market driven.

The proceeds of the issue will help the bank ramp up its capital adequacy ratio (CAR) to 14 per cent which would be enough to take of the CAR discounting when the Basel-II accords come into place.

"Post Basel-II the CAR is expected to come down to around 12 per cent which we are comfortable with," he informed.

Meanwhile, the bank has firmed up plans of entering merchant banking business through its wholly owned subsidiary All-Bank Finance Ltd. The bank is working on a business model for the subsidiary which would also involve brokering services, loan appraisal and syndication.

"The subsidiary will take up services which do not involve fund-based activity. The plan will be put up before the board shortly," he added.

The company will also cross-sell products such as insurance and mutual funds and is likely to start operations in the next one year.