IOB board OKs Bharat Overseas buy

Indian Overseas board has approved to buy out the remaining 70 per cent of unlisted Bharat Overseas Bank for Rs 1.7 billion.

State-run Indian Overseas Bank said on Tuesday its board had approved to buy out the remaining 70 per cent of unlisted Bharat Overseas Bank for Rs 1.7 billion.

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The acquisition will help IOB, India's ninth-largest bank with more than 1,500 branches, to add another 91 in a country where retail lending is rapidly growing and branch network is key, a senior IOB official said.

Founded in 1937 by an entrepreneur to fund trade between the southern Tamil Nadu and Rangoon in Myanmar, IOB owns 30 per cent of the small Chennai-based Bharat Overseas Bank.

It will buy the remaining stakes from Karur Vysya Bank, Bank of Rajasthan, Federal Bank, ING Vysya Bank Ltd, South Indian Bank and Karnataka Bank Ltd.

Shares in IOB were 1.5 per cent higher at Rs 110.70 in a weak Mumbai market.

Bharat Overseas had net bad loans of about 1.6 per cent of total assets at end-March 2005. The bank, which has one branch in Thailand too, planned to add 20 more in India in the year to March 2006.

Its per share earnings at end-March 2005 was Rs 127.31 and the book value per share was Rs 1,203, according to its Web site.