IDBI eyes unlisted state-run bank

IDBI Bank is looking at acquiring an unlisted public sector bank. The four unlisted banks are Central Bank of India, Indian Bank, Punjab and Sind Bank and United Bank of India.

The acquisition would be kicked off on completion of the integration of IDBI's commercial banking wing (the erstwhile IDBI Bank set up by the development banking institution) with itself.

"Acquisition is on my agenda. My plan of action is to finish the integration (of the commercial banking and the development banking strategic business units) and complete fixation of salaries of the two strategic business units within a year," V P Shetty, chairman, said. IDBI Bank is in talks with the finance ministry on the proposed acquisition.

"Our network of 154 branches is not commensurate with the size of the balance sheet. Any public sector bank will be willing to merge with us as the amalgamation won't create any problems on the two key parameters - human resources and branch network," Shetty said. Its balance sheet's size is Rs 82,000 crore and the expertise would almost supplement that of any public sector bank.

Also, there is no possibility of branches overlapping. Acquisition of a large branch network will help IDBI Bank reduce its high cost of funds. Its cost of funds is currently 7.14 per cent, which is much higher compared with other public banks. The cost of funds has, however, fallen from 9 per cent last year.

Analysts said United Bank of India could be a match for IDBI Bank provided the Left Front government in Kolkata approves of it.

Incidentally, Shetty earlier headed Kolkata based Uco Bank.