Bangalore-based public sector lender Vijaya Bank plans to ramp up its merchant banking services by setting up a syndication unit in Mumbai.
The bank also plans to work as a co-syndicator with a consortium of banks in the near future. “We are taking some significant steps to ramp up our merchant banking business, which will increase the bank’s fee-based income. As the first step, we will open a syndication unit in Mumbai to cash in on emerging opportunities in this space,” said Chairman and Managing Director, H S Upendra Kamath.
Kamath, however, declined to give any earnings target from the merchant banking segment. “We are not looking at acquiring any brokerage firm for complementing this kind of a service. We want to provide these services on our own,” he added.
Currently, Vijaya Bank has a capital market service branch in Mumbai, which handles interest and dividend payments. However, after electronic fund clearing services were introduced, this business facility failed to record good growth.
Owing to their popularity, most banks across the country are increasingly offering merchant banking services. Under these services, financial institutions usually provide services like portfolio management, credit syndication and advice on mergers and acquisitions. This helps banks raise their fee-based income and boost net profit.
Vijaya Bank also plans to foray into the life insurance business. “Currently, we are planning to enter the life insurance business along with a few partners. However, anything concrete is yet to emerge in this regard,” Kamath said. The bank had earlier pulled out of its joint venture with Punjab National Bank in the life insurance space. Currently, as a corporate agent, it sells Life Insurance Corporation of India's products. The public sector lender had reported a 58.5 per cent decline in its net profit at Rs 54.23 crore for the quarter ended march, owing primarily to provisions for wage revision.
