Shamrao Vithal Bank plans more acquisitions

The Mumbai-based Shamrao Vithal Cooperative (SVC) Bank is in talks to acquire a cooperative bank in Bangalore and another one in the sugar-belt of Maharashtra.

"The multi-state cooperative bank has already finalised acquisition of two urban cooperative banks in Mumbai. Now we want to acquire one in the Kolhapur-Satara region and another one in Bangalore," said Suresh Hemmady, chairman of Shamrao Vithal Coop.

Hemmady said, "We are doing due diligence for acquiring an urban cooperative bank in Bangalore. Yet, to get an independent view, we will also use services of an external agency."

As the proposed acquisition is outside Maharashtra (the bank's home state), SVC has already informed the Registrar of Cooperatives, Karnataka, and the Central Registrar of Societies.

SVC has already finalised the acquisition of two Mumbai-based cooperative banks, namely - the Samarthanagar Cooperative Bank and the Saptashrungi Cooperative Bank. The shareholders of both the banks have already given nod to the proposals to merge their banks with SVC. Thus, in total the bank is now looking at acquiring four urban cooperative banks.

Hemmady declined to name the two banks which are proposed to be acquired but said, the Kolhapur-based bank has 13 branches with accumulated losses of Rs 25 crore, while the Bangalore-based bank has 14 branches. He said the bank was going to acquire assets, branch networks and losses.

However, the bank will not absorb the entire staff of the new banks. SVC will retain only experienced staff critical to run the businesses in the respective regions. The losses will be written-off over a period of 5-10 years, subject to regulatory norms, he said.

The bank's capital and reserves as on March 31, 2005, stood at Rs 227.66 crore and are expected to cross the Rs 300 crore mark by the end of March 2006. This fund base will help finance the acquisitions, Hemmady said.

Earlier, the Reserve Bank of India has stopped issuing licenses to cooperative banks for opening new branches. This stunted the growth of well-managed cooperative banks. SVC's acquisition plans would remove the handicap in expanding operations and also in spreading its reach.