Saraswat set to merge Mandvi Bank

Saraswat Co-operative Bank will acquire Mumbai-based Mandvi Co-operative Bank, adding over Rs 880 crore business to its books by the end of December 2006.

It is also conducting due diligence on the Pune-based Suvarna Sahakari Bank and in discussion with four UCBs for prospective acquisitions.

The proposed merger of Mandvi Bank, a UCB with a strong client base comprising the Gujarati community in Mumbai, is a first case of amalgamation of financially sound urban bank with another healthy cooperative bank. The shareholders of Mandvi Bank gave the nod for its merger yesterday.

Mandvi has net owned funds of Rs 54 crore with capital adequacy of 12.5 per cent. It total business, comprising deposits (Rs 575 crore) and advances (Rs 307 crore) stood at Rs 883 crore by end of Mach 31, 2006.

Its gross non-performing assets are Rs 38 crore ( 9 per cent). It has 19 branches with staff strength of 385, which will be absorbed by Saraswat Bank.

Ekanath Thakur, Saraswat director, said small cooperative banks face huge challenges with new set of regulations governing their business and it was a wise step to merge the financially sound Mandvi.

The Reserve Bank of India's guidelines make it clear that it (RBI) would like to deal with small number of large-sized banks than large number of small-sized banks, he said.

Saraswat Bank's business at end of September 2006 stood at about Rs 11,700 crore (Deposits - Rs 6,800 crore and Advances - Rs 4,900 crore). Its capital adequacy was 12.5 per cent with owned funds in excess of Rs 750 crore.

Managing director R Banerji said Saraswat was considering four proposals for acquisitions. Further, it may relook at Matunga-based South Indian Coop Bank and Rupee Cooperative Bank both of which are under moratorium.