United Bank eyes merchant banking, loan syndication

Mumbai: Public sector lender United Bank of India said it will foray into merchant banking and loan syndication business by this year-end.

"We do not have a presence there right now and will start operations by end of the third quarter of the next fiscal," the bank's Chairman and Managing Director Bhaskar Sen said.

All the major public and private sector banks have a presence in the merchant banking space which helps them with fee income and also participate in loan syndication, in order to fund larger corporates.

Considering its plans, the Kolkata-headquartered bank has initiated a slew of initiatives on the talent management and upgradation side and will soon be announcing an incentives scheme for its employees, Sen added.

The bank, which has a corporate loan-book of Rs 30,000 crore, or 54 per cent, of its total loan-book, inaugurated its third dedicated corporate finance branch in Mumbai on Tuesday, which has 75 corporate accounts with a total outstanding of Rs 9,000 crore.

When asked about his outlook on lending and deposit rates, Sen took a contrary view from widespread expectation, saying that they are unlikely to rise.

The money market market instruments generally act as the barometer and they are going down, he said, adding, "possibly, there should be a dip...I don't think there will be a pressure to hike rates".

The deposit rates will also go down as they are quite high, he added.

The bank expects to close the fiscal with a credit growth of around 20 per cent, while there will be some improvement on the deposit growth figure which stood at 11 per cent as of December-end, Sen said.

In spite of the low deposit growth, the CD (credit-deposit) ratio of the bank stands at 62 per cent and still there is room to lend more, Sen said.

The bank is well-capitalised currently and will not be looking at any capital raising next fiscal. Nor is it looking at expanding overseas, Sen said.

Source: Financial Express