Public sector bank Union Bank of India (UBI) is planning to enter three new
businesses, according to chairman and managing director M V Nair.
three businesses in the offing are general insurance, credit card and private
on their prioritisation, Nair said that first the bank would finalise the life
insurance venture, followed by the mutual fund business. The bank is discussing
the possibility of joint ventures for the mutual fund business with some foreign
companies. Further down the list are the three probable businesses of general
insurance, private equity and credit card businesses.
said that UBI plans to get its general insurance off the ground sometime in financial
year 2008-09, but is yet to get a fix on the time frame for its credit card and
private equity ventures.
year, UBI had signed a MoU with Bank of India, and with Japanese insurance major
Dai-ichi Mutual Life Insurance, with Bank of India as the majority shareholder
in the venture with a 51-per cent stake in the venture, followed by Dai-ichi''s
26 per cent, and the remaining 23 per cent owned by Union Bank. (See: Union
Bank, Bank of India, Dai-ichi Life join hands for Life Insurance JV)
said that UBI had changed its deposit strategy last year, enhancing its focus
on core deposits. He said the bank is using that strategy to contain the growth
of wholesale deposits, which were at Rs18,300 crore as on 31 March. Core deposits
are seen growing at 25 per cent during July-September, and may end the year with
a 28-30 per cent growth.
deposits are expected to display a growth of 23 per cent during this financial
year, according to Nair.
on improved margins, Nair said that UBI''s focus on low-cost deposits may not reflect
in better margins this year, as interest rates on deposits rose during the June
quarter, due to competition. To that extent, the bank could not pass on the interest
rate hike to borrowers. On the retail side, the higher deposit rates motivated
savings depositors to shift their resources to term deposits, and the resultant
higher cost also kept margins under check for the current financial year.
said that to maintain its margins at projected levels, UBI is working on two strategies;
the first to maintain current account growth at over 30 per cent, and the second
to see savings deposit growth at 25 per cent.
Bank, is in the process of opening offices in Shanghai, Hong Kong and Abu Dhabi.