Bank of Baroda is set to float a joint venture stock broking company and is at present talking to around four large stockbroking houses for a possible tie-up. The equity base of the company is likely to be around Rs 100 crore (Rs 1 billion).

The bank has also firmed up plans to open up a subsidiary in Tanzania, representative offices each in Malaysia and China and an offshore branch in Singapore.

It has also targeted a 50 per cent rise in net profit from overseas operations this year and is hopeful of achieving a Rs 300 crore (Rs 3 billion) figure.

Talking to newspersons today, chairman and managing director of BoB P S Shenoy said that the bank was in the process of talking to four large stock broking group and was likely to finalise a deal in the next few months.

"We are in the process of readying the business model of the company," he added. The bank was also likely to declare a dividend this year and it was comfortable on all measures stipulated by the Reserve Bank of India for being able to declare dividends on its own.

BoB had declared a 30 per cent interim dividend in December. This year the bank hopes to bring down its net non-performing assets below two per cent and its gross NPA below 6 per cent.

"Our bank's net NPA was around 3.47 per cent in December 2003, which was likely to fall below three per cent in 2003-04," he said.

Shenoy said the bank has targeted a 20 per cent growth in balance sheet size as well as its net profit in 2004-05.

Talking about its subsidiary companies, Shenoy said, "The target was to expand all its subsidiaries like merchant banking, housing finance and asset management business."

It has also firmed up plans to sell non-life insurance products from one of the public sector insurance companies and has shelved the idea of opening selling life insurance products.

"We have as of now abandoned the idea of selling life insurance products, and would concentrate on the non-life segment. After we have gained considerable experience in selling non-life products should we plan to enter the life business," explained Shenoy.

BoB finalises bank buyout plan

Bank of Baroda has decided in principle to acquire a bank. Divulging the bank's intention, Shenoy said BoB would ideally acquire a bank which has strong local presence in areas where the bank does not have a major presence.

BoB also hopes to make an announcement in this line by 2006. Possibilities were that the process would be initiated by the end of the fiscal.

"We are a strong player in the west and would look at smaller banks with strong presence in east, north and south to emerge a pan India bank with strong presence all over the country," said the chairman.

Citing examples, Shenoy said bank's like Punjab National Bank, Corporation Bank and Allahabad Bank which were strong in their respective locations. Shenoy, however, did not rule the possibility of merging more than one bank with itself.

On the number of branches BoB was looking at through acquisitions, Shenoy said, "A presence in each commercial location would be the priority, but there was bound to be overlapping which we would merge," he said.

Citing the example of State Bank of Saurashtra which they took over, Shenoy said of the 106 branches that SBS had, as many as 40 branches were merged with BoB.

Talking about takeover candidates and their consideration, Shenoy said: "We would be looking at synergies on the basis of geographical location and culture match."

"With Basel-II, the size of a bank is critical and in principally there is a thinking in this line," he added.

Meanwhile, the bank has also initiated the process of merging its housing finance arm with itself.

At present the due diligence process is on and BoB is negotiating with the National Housing Bank for buying out its 30 per cent.

"The process of merger is likely to be complete this year or the first part of the next fiscal," he added.