Public sector lender Bank of Baroda on Thursday said it has signed a binding share purchase agreement with ANSA Merchant Bank Ltd for selling its subsidiary, Bank of Baroda (Trinidad and Tobago) Ltd, or BOBTTL.
The transaction is subject to the approval of the Central Bank of Trinidad and Tobago.
This was the first attempt by any state-owned bank to sell its international units.
BOBTTL started operations on 17 October 2007. The bank said its board had approved the sale of the subsidiary in 2017 as part of its plan to rationalize international operations. After due diligence, empaneled investment banker BOBCAPS Ltd had identified ANSA Merchant Bank Ltd as a potential buyer, Bank of Baroda said.
“We have had a long and successful tenure in Trinidad and Tobago and will look forward to a disruption-free service to the valued customers of BOBTTL. Bank of Baroda stays committed to maintaining its existing international relationships," said Murali Ramaswami, executive director, Bank of Baroda.
Based in Port-of-Spain, Trinidad, ANSA Merchant Bank Ltd is into auto financing, asset finance, investment services, merchant banking, and treasury services.
In August 2018, Mint had reported that Bank of Baroda aimed to sell its offshore subsidiaries in Ghana and Trinidad and Tobago. The two subsidiaries constitute less than ₹1,000 crore of its total business, the report had said.
Bank of Baroda reported a net profit of ₹737 crore for the three months to September, almost five times higher than the year-ago period, on the back of higher other income.
The bank’s profit was higher than ₹165.4 crore estimated by a Bloomberg poll of 19 analysts.
BoB’s other income was buoyed by trading gains of ₹942 crore in the quarter, compared with ₹138 crore in the corresponding period of last year. It has a presence in 21 countries through 100 overseas branches.
In November 2017, the government’s department of financial services had asked state-run banks, which are looking at ways to downsize their overseas operations to ensure efficient use of capital, to discuss the issue at their respective board meetings before taking a final call.
Besides, public sector banks have also been looking to close branches or sell subsidiaries to focus on markets giving them maximum returns.
In a regulatory filing on 15 December 2018, Bank of Baroda had said it would sell its subsidiaries in Guyana, Trinidad and Tobago and Ghana by 30 June 2019.
It had cited government guidelines for rationalization of overseas presence, increase of efficiency and profitability of the overseas offices of the bank as reasons for closure.
The subsidiary in Trinidad and Tobago reported a total revenue of ₹23.9 crore and had a net worth of ₹5.54 crore in FY18.
Bank of Baroda started its overseas operations by opening its first branch way back in 1953 in Mombassa, Kenya.
News agency PTI reported in December last year that as on 31 January 2018, public sector banks had about 165 overseas branches, besides subsidiaries, joint ventures and representative offices.
The state-owned banks, PTI said, have the largest number of branches in the United Kingdom, followed by Hong Kong, the UAE and Singapore.