M Venugopalan: A relationship banker

NEWSMAKER

M Venugopalan

Career banker M Venugopalan has the uncanny knack of stealing the limelight for the right or wrong reasons.

In 2003, he was made the chairman-cum-managing director of Bank of India even though he did not have a residual service of two years -- a necessary precondition to be appointed the CMD of a public sector bank.

His predecessor in Bank of India, KV Krishnamurthy, reportedly volunteered to step down three months before his tenure was to end to ensure that Venugopalan, an executive director with Union Bank of India then, would succeed him.

However, that was not required as Venugopalan, senior bankers say, knew the right people at the right places to get the top job.

His relationship management skill has once again come to the fore. As the chairman of Federal Bank, Venugopalan has been able to pursue the promoters of Lord Krishna Bank (LKB) to sell their stakes and merge LKB with Federal Bank, kicking off the first consolidation drive in the old private sector banking industry.

Had Venugopalan had his way, he would have been credited for steering the first consolidation move in public sector banking during his short stint as BoI chairman.

Even the smallest details of the merger of Bank of India and Union Bank "" including the name of the new entity "" were drawn up last year by him and former Union Bank of India Chairman V Leeladhar but the government developed cold feet at the last moment under pressure from the Left and called off the merger.

Venugopalan began his carrier with Canara Bank in the mid-1960s but shifted to BoI even before he finished his first year with the Bangalore-based bank. As an executive director of Union Bank, he got along famously with Leeladhar, who is now a deputy governor of the Reserve Bank of India.

Union Bank insiders say the Leeladhar-Venugopalan combination, like a pair of fast bowlers on a green-top wicket, have done wonders for the bank. They pumped a lot of energy into the bank's activities, increased the size of its assets, improved its quality and took the bank to the market with its maiden public issue.

'It was a refreshing sight as rarely do the chairman and executive directors of a PSU bank get along with each other,' says a banker who has seen them working together.

Once back to BoI as its chairman, Venugopalan spent most of his time working on the proposed merger quietly. 'He never loses his cool and he knows how to extract the best from his colleagues,' says a banker who has seen him from close quarters.

No wonder, the choice fell on him to head the Federal Bank after his retirement from BoI. He took over the new assignment at a time when the bank management was vertically split with one faction opposing tooth and nail a reported move by ICICI Bank to take over the control of Federal Bank.

ICICI Bank, which holds about 20 per cent stake in Federal Bank, always denied such a move. In a short time, Venugopalan put the house in order, announced a GDR issue and lapped up Lord Krishna Bank to add flesh to Federal Bank's balance sheet.

Those who are in the know of the deal say Venugopalan is a tough negotiator and bargained hard with the LKB promoters without any aid from any investment banker.

At a Business Standard bankers' round table in Chennai last month, Venugopalan had said, "Small is beautiful and big is beneficial. But some small banks are not beautiful and they will disappear soon."

Southern bankers say Venugopalan is likely to play a key role in the disappearing act of small banks.

With a $100-million GDR kitty under his belt, he is set to make Federal Bank big and beneficial by gobbling up a few small banks in that region.