The state-run banks have rekindled their interest in asset management business (AMC) as they believe it will add value and revenues to their existing operations.
Following many other state owned banks, Bank of India which had wound up their AMC arm almost a decade ago has again decided to revive the business. TS Narayanasami, chairman and managing director of Bank of India, told FE that ?Yes we are thinking of floating AMC arm in joint partnership with some other organisation?.
However, Narayanasami maintained that it was not the appropriate time to start the business when the stock market was volatile as it can?t give an attractive net asset value (NAV).
The state-run Union Bank of India has floated its AMC arm in joint venture with KBC asset management NV (KBC AM), a leading Belgian asset manager with operations around the world. Another state-run Punjab National Bank, which has recently moved away from Principal Asset Management Company, is seriously working along with yet another state-run Vijaya Bank for the formation of the AMC.
Prakash P Mallya, chairman and managing director of Vijaya Bank? said that ?Hopefully we will form the AMC within a month or two.? The idea was to increase our fee-based income, added Mallya without disclosing anything further details.
Bank of Baroda and Canara Bank are already having their AMC arms in JV with Pioneer and Rebecco respectively. In fact, BOB?s AMC wing has come into operation recently after getting a clearance from the SEBI.
Commenting on it, the bank?s chairman & managing director, MD Mallya, said that it will add value to the services being provided by the bank and also will help increase the fee-based income. Allen CA Pareira, chairman & managing direrctor, Bank of Maharashtra, said that it was more due to the fact that the banks want to keep business within their own organization. Pareira said he was yet to apply his mind if his bank should go for AMC.
Janmejaya Sinha, managing director of India, Boston Consulting Group which is providing consultancy services to a number of banks for the AMC formation, said that the Indian asset management industry is at a nascent stage. ?The banks need to align individual employee incentives to make these sales more attractive for them individually,? he suggested.