SHCIL deal: IDBI gains on ready platform
IDBI Bank says that the merger of Stock Holding Corporation of India Limited (SHCIL) to itself will help it add 20 per cent of its branch network at less than 10 per cent of its employee strength.
It is also hopeful of cross-selling its banking products to almost 8 lakh high-value customers of SHCIL and will also derive benefits from its tech savvy businesses of custodial services, depository services, document storage and digitisation and also the broking business. But will this acquisition provide IDBI the gains in line with what HDFC Bank got from acquiring Centurion Bank of Punjab and what ICICI Bank got from acquisition of Bank of Rajasthan.
While the deal is not directly comparable with respect to the acquisitions done by HDFC Bank and ICICI Bank, since majority of the 227 offices of SHCIL can be converted into branches, the opinion on the street is that it is definitely going to benefit IDBI by way of adding around 200 branches at one go and also adding to their client base and improve CASA (current account and saving account) ratio.
On its own, SHCIL has a stable business, revenues and profits with limited growth opportunity but the market expects that after its merger with IDBI, there will be inflow of business from other banks and financial institutions that have interests similar to SHCIL and thus will generate synergy benefits.
While the bank has been growing fast both in terms of its deposits and credit and also on the
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