Corporation Bank plans to merge housing finance arm with itself

Taking a cue from the State Bank of India, Corporation Bank is set to merge its wholly owned subsidiary, Corporation Bank Homes Ltd, with itself.

The bank's board will meet on December 27 to consider the matter, Corporation Bank said in a notice to the Bombay Stock Exchange today.

This is seen as a logical move since both Corporation Bank and the housing finance arm offer home loans.

The subsidiary earned an operating profit of Rs 7.02 crore for the year ended March 2004 as against Rs 8.42 crore for the previous year. Net profit was Rs 5.63 crore as against Rs 6.50 crore for the previous year. Disbursements aggregated to Rs 102.51 crore during the year and the asset book size was Rs 304 crore as at March 2004.

The net worth of the company stood at Rs 28.65 crore and the capital adequacy was at 17.80 per cent, which is higher the stipulated minimum requirement of 12 per cent.

The Mangalore based bank has only subsidiaries, Corpbank Homes Ltd and Corpbank Securities Ltd.

SBI was the single largest shareholder in SBI Home Finance. SBI liquidated the SBI Home Finance in April 2003.

SBI Home Finance was floated in 1993 jointly by Housing Development Finance Company (HDFC), Unit Trust of India, Life Insurance Corporation of India, General Insurance Corporation of India and SBI.

As none of the financial institutions were keen to pump in fresh funds into the beleaguered SBI Home Finance, SBI bought out their holding and liquidated the outfit.

The company ran into heavy losses with high cost of funds and defaults from the corporate and construction sector. SBI Home Finance is a listed company, with the public holding at 40 per cent.