The Chennai-based Indian Overseas Bank will be acquiring Shree Suvarna Sahakari Bank, a Pune-based cooperative bank. The acquisition plans have been approved by the board of directors of IOB in a meeting held on March 29.
In an interview with Business Standard on Monday, IOB Chairman and Managing Director S A Bhatt said the acquisition will help the bank establish its presence in the western parts of the country. “If IOB wants to start branches, it will take another four to five years. Expanding through an acquisition would be easier,” Bhatt said.
Bhatt informed that acquisition process will take 6-7 months to complete. “This acquisition is a test process; if this model becomes successful we will go in for more acquisitions.”
This will be the second acquisition for IOB since the last quarter of the current financial year. Earlier in February, IOB had entered into a joint venture with JM Financial to acquire a minimum 10 per cent of the paid-up capital amounting to Rs 210 crore in the asset reconstruction company promoted by JM Financial. The said plan is subject to approval from the Reserve Bank of India.
Two or three public sector banks and high net worth individuals are likely to participate in the venture.
During the current financial year the Pune-based bank did total business of Rs 1,200 crore during the current financial year. Total liability is around Rs 700 crore and assets at Rs 500 crore. Bhatt said currently, the bank has 12 branches in Mumbai and Pune.