Nifty99000 100%

Sensex99000 100%

Article rating: 4.3
Article rating: No rating
Article rating: 2.0
Article rating: 1.5
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: No rating
RSS

News

IDFC, Capital First like deals may spice up banking space in coming years

Author: Debasis Mohapatra/Tuesday, January 16, 2018/Categories: Banking & Financial Services

IDFC, Capital First like deals may spice up banking space in coming years

Mumbai: Merger of IDFC Bank with non-finance banking company Capital First may be the precursor for many more such deals in coming years as financial institutions look at strengthening their footholds in varied segments.

According to analysts, though this could not be considered as a trend, but there is a distinct possibility of more mergers and acquisitions in banking space going ahead.

“This couldn’t be termed as a trend as of now. But, possibilities of such deals in the near future couldn’t be overruled. Every merger and acquisition deal in banking sector will be transaction specific,” Group head- Financial sector ratings at rating agency ICRA told The Finapolis.

As banks look at expanding their retail deposit base, inorganic expansion would definitely be explored, he said adding that banks buying out microfinance institutions could be one such example.

Last week, IDFC Bank and Capital First announced merger to form a combined entity with assets under management of more than Rs 88,000 crore in a share swap arrangement. According to the deal, the swap ratio will be 139 shares of IDFC Bank to every 10 shares of Capital First.

The merger will help the new entrant in the banking space- IDFC to strengthen its retail deposit base which is traditionally high on corporate loans. The combined entity will have a distribution network of 194 branches along with 353 dedicated business correspondent outlets. IDFC Bank will also receive a retail lending franchise with a loan book of around Rs 23,000 crore of Capital First post this merger.

IDFC Bank with a current account, savings account (CASA) deposit base of around 8% will also see growth in its low cost deposit base due to this deal.

In a bid to increase retail deposit base, banks and non-finance banking companies have acquired many small finance entities in recent years. Last year, while Kotak Mahindra Bank had acquired BSS Microfinance for Rs 139 crore, IDFC Bank had bought out a Tamil Nadu- based microfinance institution (MFI), Grama Vidiyal.

Even in search of scalability, Kotak Mahindra Bank had acquired ING Vysya Bank for Rs 15,000 crore in an all stock deal in 2014.   

As credit growth in the banking system picks up with economic recovery gathering pace, analysts see many more such deals in coming days.   

Print Rate this article:
No rating

Number of views (186)/Comments (0)

rajyashree guha

Debasis Mohapatra

Other posts by Debasis Mohapatra
Contact author

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest
 
 

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free