Mumbai:
Three public sector banks Corporation Bank,
Indian Bank and Oriental Bank of Commerce are forming
an alliance that will allow them to collectively build
loan assets as well as fee-based businesses.
The
combined asset base of the three banks is Rs147,079 crore,
higher than that of Punjab National Bank, the country's
largest public sector bank after State Bank of India,
which has assets worth over Rs400,000 crore.
The
three banks are expected to sign a memorandum of understanding
(MoU) soon. The CMDs of the three banks are meeting on
September 15 to discuss and if agreed, to sign the MOU
for strategic business association in identified areas,
for mutual benefit, Corporation Bank said in a filing
with the BSE.
The
plan includes sharing branches, automated teller machines
and even sharing of employees. The banks will also discuss
expansion and branch location plans amongst themselves
to exploit geographical and locational synergy.
The
boards of Corporation Bank and Indian Bank have already
cleared the proposal while the Oriental Bank board will
take up the ahead of signing the MoU.
The
business alliance would help the banks improve their pricing
at a time when interest margins are thinning.
Banking
analysts see the Corporation-Indian Bank-Oriental Bank
alliance as prelude to a larger consolidation in the country's
banking sector as suggested by finance minister P Chidambaram
earlier this year.
Oriental
Bank and Corporation Bank are listed while Indian Bank
is planning an initial public offer early next year.
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