BoB, PNB seen vying for AllBank

Bank of Baroda (BoB) and Punjab National Bank (PNB) are the two possible contenders likely to take over Allahabad Bank, according to industry sources.

Sources said the government was considering two alternatives for the Kolkata-based bank and that the ministry was yet to take a concrete decision.

O N Singh, chairman and managing director of Allahabad Bank, however, said the government was looking into the consolidation issue where in the bank also figured, but he was yet to receive any information on the issue. "I am not in a position to comment on the names of the possible takeover candidates," he explained.

Meanwhile, Allahabad Bank hopes to cross Rs 1,100 crore operating profit in 2004-05 and has targeted a Rs 61,000 crore business for the year. The bank also hopes to bring down its net non-performing assets below 1 per cent.

The supporting strategies for the targets would be based on rationalisation of branches at metropolitan centres and opening new branches in upcoming growth centres.

AllBank would also initiate segmentation of branches with specific business focus and offshore banking units in special economic zones to boost export credit and fee-based income.

Meanwhile, the bank had performed a revaluation exercise of its real-estate assets which was last done on 1997. The revaluation resulted in an upward revision in assets to Rs 126 crore which was credited to the capital reserves of the bank.

The scrip, which was ruling around Rs 30 towards the beginning of the fiscal, has more than doubled to Rs 70. Meanwhile, the bank has also decided to approach the capital market with a Rs 100 crore public issue in October. This will scale down government holding in the bank to 51 per cent.

The proposed offering will raise the bank's capital adequacy ratio to around 14 per cent while the capital of the bank as of now stands at Rs 346 crore. The bank's reserves stands at Rs 1,205 crore as of March 2004, against Rs 823.59 crore in the previous year.

The Kolkata based bank was also considering an overseas listing after the second issue. Allahabad bank has off late received excellent offers from foreign financial investors (FII). Given its price per earning ratio which stands at Rs 3 while the average P/E of the bank being Rs 5 there was enough scope for appreciation.