Bank of India, Union Bank to form alliance

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Mumbai, Oct 22: In a significant move towards cartelisation in banking, two large state-run banks, Union Bank of India and Bank of India, are currently negotiating terms to form an alliance. This is aimed at providing funds jointly for big projects and share syndication fees. There was speculation last year about a possible merger of these two banks, based in Mumbai.

The banks have also agreed not to under-price their products. Another Mumbai-based lender, Dena Bank, is contemplating joining the venture. A formal announcement is expected in a month.

This comes close on the heels of a similar announcement made by three medium-scale state-run banks—Corporation Bank, Oriental Bank of Commerce and Indian Bank—for a similar purpose.

The chairmen and managing directors of both Union Bank and Bank of India confirmed the development to FE.

“Yes, we are currently speaking to some of the banks to form an alliance which will enable the consortium to jointly appraise certain initiatives like big exposures. The corporate customers would also be benefiting, since they would not have to go to different banks for their resources needs ,” M Balachandran, CMD, BoI, told FE.

MV Nair, CMD, Union Bank, also confirmed his bank was in talks with other banks to reach a similar understanding.

Is It Cartelisation?

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