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GTB seeks partner for retail thrust

Rajalakshmi Menon

MUMBAI, June 20

GLOBAL Trust Bank Ltd (GTB) is in the process of identifying a strategic partner, preferably a foreign bank, to provide it technical expertise and know-how in the retail segment, said a senior bank official.

The bank has given Morgan Stanley Dean Witter, international investment bankers, the mandate for identifying a partner.

The bank proposes to offer the strategic partner at least a 20 per cent equity stake. ``We expect to enter into a tie-up by September,'' said Mr. Diptesh Shah, head of investment banking, GTB.

For the past three months the bank has been working on restructuring its organisation set-up to give a thrust to retail banking.

``We are looking at developing our retail segment, that needs advanced technology, to help us develop relationship management for our customers,'' said Mr. Shah.

He explained that the bank had two alternatives -- one was to go for such technology on its own, an option that would take five-six years, or to get it more quickly by sourcing the technology from a foreign bank, as the bank intended to do.

In the following months, the bank is planning to launch several new products such as credit and debit cards, besides products in consumer and housing finance. ``The assistance of a foreign bank would be useful while launching such products,'' said senior bank officials.

The bank plans to expand the scope of its capital market intermediation, extending it to the branch level, this fiscal. The bank is also supporting the Internet broking efforts of its clients.

``Our core expertise is in being part of the payment system, our role as a trading bank, besides being a settlement agency for cash or securities,'' said Mr. Shah.

The bank is also planning to distribute mutual fund products in the next two-three months. ``We will commence this business in a few designated branches and then extend it to other branches,'' he said.

GTB plans to increase its branch count to 140 in the next two years. Currently, the bank has 74 branches -- 21 main line and 53 retail branches. It plans to increase the number of main branches to 28. ``There is a need to penetrate the metros in a b igger way,'' said Mr. Shah.

The bank intends to add 100 more ATM machines by December and 250 by December 2001. The bank has 40 ATMs currently.

Invests Rs 300 cr in debentures

GLOBAL Trust Bank invested around Rs. 300 crores in debentures during 1999-2000.

``We have also made some investments in mutual funds. Our short-term exposures in mutual funds are mostly for the purpose of dividend stripping,'' said Mr. Diptesh Shah, head of investment banking, GTB.

Last year, the bank made an investment of Rs. 30 crores in mutual funds and Rs. 10 crores in private placement of equity.

The bank does not make investments in the secondary market and, hence, most of the funds deployed are in short-term debt instruments. ``The bank has the option to exit every quarter

or every six months and we will exercise that option if interest rates rise,'' said Mr. Shah.

In the depository category, the bank has positioned itself in two market segments -- brokers and retail investors.

The bank had 19,000 depository accounts in March 1999, which went up to 1,06,000 in March 2000. ``The bank is now looking to consolidate its position,'' said Mr. Shah.

He said while the bank could not expect the same response this year, it would look to raising the number to around 1,50,000-1,70,000. For this, it is planning to target active players in the market.