Finally, United Bank of India, which was formed through amalgamation of four Bengal-based banks in 1950, plans to go public, this December. The bank, which was at number six at the time of nationalisation has slipped down the ladder amidst competition. However, gradually the bank is getting back its shape. Chairman & managing director S C Gupta talks to Rohit Khanna about the bank’s turnaround path and how he intends to transforms the bank into a tech-savvy national bank with a local flavour.
Why do you think investors should subscribe to UBI shares?
One is the value for money. Today, the book value is around Rs 94. By September, it would only go up. Therefore, investment for the local investors would mean a good return. With a small capital of Rs 266 crore, you can imagine that the bank would make higher profit than that. Even 100% dividend payout is not much to expect. Second is customer loyalty. People in east and north-east really have linkages with us. They relate with us as a local bank.
What are the steps you are taking to enhance your corporate image?
We are yet to engage people for the job. For a bank of our size, we need to engage professionals. It could be the likes of BCG or McKinsey. They will have a look into our profitability, processes, marketing and the whole gamut of our business process re-engineering.
Then comes the acceptability of the business process in the bank particularly clerks, officers and unions. So that whenever you bring a change of that size, people should not think that you are changing the organisation. The lurking fears that are often found in the public sector organisations like they will lose their jobs will have to be addressed simultaneously. And then only the success story can come.
At the time of nationalisation, the bank was at the number six and today we are at the bottom of the ladder. I have no hesitation in accepting the fact. The fact is we need to change the culture and the way, we look at the business.
Is there any plan to change the logo?
Look, that is step two. If we relate it now, for people to identify us with the new logo could be a problem. If we are going for a public issue in December, then we have to go with this logo.
The logo we have now is typical of agriculture and has a limited value. Agriculture is not the only activity we are doing. If you look at the total exposure of the bank then agriculture may be 10-11%. That cannot reflect our true strength.
What is the business are you looking at?
Today our base is relatively small- around Rs 90,000 crore. We intend to push it to around Rs 1,25,000 crore by end of this fiscal. We were at Rs 75,000 crore in December last year and went to Rs 90,000 crore in this March.
Ironically, the bank has grown by Rs 35,000 crore in the last three years. It went from Rs 37,000 crore in March 2005 to Rs 75, 000 crore by March 2008.
A lot of new products are also coming. For life insurance, it has tied up with Tata AIG and non life Bajaj Allianz. Last year, it earned Rs 25 crore from insurance business. We are trying to increase the life insurance business by more than 50%.
Banking, five years down the line, will not be dependent on interest income only. We do not intend to start our own mutual fund business but we will continue to sell products of other companies. We need to focus on profitability then even the small could become beautiful.
What will be your book size when you go for the IPO?
We should be about Rs 1,10, 000 crore. The first quarter is likely to be dull and we should close the quarter at about Rs 95,000-96,000 crore. We should have another Rs 15, 000 crore by September. Typically, 30-35% business comes in the first half and the rest in the second half. The sectors we are considering are infrastructure, agriculture and MSME. We are also looking at housing sector. The numbers are small in housing sector but still we are committed to that because we get other businesses along with the housing.
You are a bit late entrant on the technology front. How do you intend to take it forward?
The advantage of entering late is you have the latest technology available. By August-end, all our branches will be on computer. We have appointed Infosys and HCL for providing IT solutions. Instead of internet banking, we are going to offer online banking where you can physically move your balance within the bank. Similarly, there will be mobile alerts. On September 30, we will have the final thing on technology.