Informist, Thursday, May 19, 2022

--Bank of Baroda MD: Open to rope in partner for cards arm BOB Financial

--Can directly meet capital needs for BOB Financial

--Want distribution expertise from partner in BOB Financial

--To recruit 500 wealth managers

By Ajay Ramanathan and T. Bijoy Idicheriah

MUMBAI – Bank of Baroda is open to bring in a partner for its subsidiary BOB Financial Solutions, not to provide capital, but to leverage on their distribution or technology strengths, Managing Director and Chief Executive Officer Sanjiv Chadha said.

"You really do not need capital for capital's sake, we can provide the capital. In case, a partner can bring either distribution strength or technology prowess, I think that is something we might explore," he told Informist.

BOB Financial Solutions, which was earlier known as BOBCards Ltd, is a wholly-owned subsidiary of Bank of Baroda, and is in the credit cards business. As on Mar 31, it hit a milestone of 1.1 mln credit cards with new card issuance rising 132% on year.

In 2010, Bank of Baroda had inked an agreement with Spain's BBVA to sell a 51% stake in the credit cards venture, but eventually the deal did not fructify.

While recognising that the credit card company's performance has been on the uptrend, Chadha acknowledged that it is still at least two years behind the public sector lender's joint venture entity IndiaFirst Life Insurance Co, which is already being primed for an initial public offering.

Pointing out that BOB Financial was one of the five largest credit card issuers in the country, Chadha said that the cards subsidiary had been growing and looked poised to deliver good value and significant valuation to the bank, like IndiaFirst Life Insurance had done. Bank of Baroda owns 65% stake in IndiaFirst Life.

"We believe that business has finally been able to leverage the distribution strength of Bank of Baroda, and is doing reasonably well, and we hope to be able to sustain that momentum," he said.

OTHER ARMS

Apart from BOB Financial Solutions, the public sector lender has two other wholly-owned subsidiaries – Baroda Global Shared Services and BOB Capital Markets.

Baroda Global Shared Services manages back office processes across the bank, whereas BOB Capital Markets provides investment banking services. Chadha said that the capital deployed in the investment banking venture was fairly small.

The total revenue of Baroda Global Shared Services rose 71% to 841.6 mln rupees in 2021-22 (Apr-Mar). The investment banking subsidiary's gross revenue rose 18.3% to 550.5 mln rupees.

Chadha said that the shared services company was helping the bank in terms of cost efficiencies, and was working closely with the bank's digital offering, bob World.

"On one hand, the front-end is getting digitized through bob World and on the other hand, the back-end is getting efficient through BOB Global Shared Services, which is able to do things at a far lower cost. I think BOB Global Shared Services actually has been a big success."

AMC OPS

Effective Mar 14, Baroda Asset Management India Ltd merged with BNP Paribas Asset Management India Pvt Ltd, and BNP Paribas Trustee India Pvt Ltd with Baroda Trustee India Pvt Ltd. Bank of Baroda also holds 50.1% stake in Baroda BNP Paribas Mutual Fund.

The merger birthed an entity with a combined net worth of nearly 1.5 bln rupees as on Mar 31. Its average assets under management were 213.9 bln rupees as on Mar 31.

"I think that is a business that should see very good growth because that again ties up well into our wealth management initiatives," Chadha said.

Bank of Baroda aims to hire 500 wealth managers who will lead the bank's push on offerings such as asset management and wealth management, he said.

The fund house will offer 28 schemes across equity, hybrid, debt and overseas fund of fund categories. It is expected to serve over 1 mln investor folios and more than 10,000 distributors.

In an event on Mar 14, Chief Executive Officer Suresh Soni said that the fund house is eyeing a spot in the Top 10 in terms of garnering net inflows into the industry.

At 1425 IST, shares of Bank of Baroda were down 3.7% at 95.75 rupees on the National Stock Exchange.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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