Financial Times

Commercial Bank venturing into India
By Duruthu Edirimuni
In keeping with its regional diversification strategy, Commercial Bank has decided to venture into India this year, following the success of its Bangladesh business, and is also looking at expanding its lending portfolio in the Maldive islands where it has lent to hotels.

"We are looking at several potential locations in India such as Mumbai and Chennai," Ranjith Samaranayake, Deputy General Manager, Finance and Planning told The Sunday Times FT. "We are talking to the authorities on regulatory approval."

Stock market analysts said the bank would go for either an acquisition like in Bangladesh, or a joint venture to establish their presence in India. Samaranayake said the bank is evaluating both these opportunities. "Depending on the prospects, we will either go for an acquisition or a joint venture," he said.

He said the bank is discussing the cost of return in such a venture and finer details are being worked out. Meanwhile, Commercial Bank's Bangladeshi operation, which was rated in the 'A' category, the highest bank rating, by the Bangladesh Bank (equivalent to the Central Bank), is finalising the first ever debenture issue by a financial institution in Bangladesh.

Samaranayake said corporate bonds and corporate debt are still new to the Bangladeshi market. "We are closely studying the legal system relating to such products," he said.

Commercial Bank acquired the Bangladesh operations of Credit Agricole Indosuez Bank in Bangladesh in 2003 with an investment of US$ 20.5 million.

Currently it has two branches and two commercial booths (mini-branches) catering mainly to corporate customers. Initially, the bank gave more weight to corporate banking in Bangladesh. However, during the past year, it has been aggressively marketing personal banking products such as credit cards.

Vajira Premawardhana, Executive Director, Lanka Orix Securities Company (Pvt) Ltd., said Commercial Bank's personal banking products in Bangladesh will add to its bottom-line growth.

"The bank is attracting a lot of attention from the growing middle class population in Bangladesh and its personal banking products such as credit cards are becoming increasingly popular," he said.

Meanwhile, the bank is looking to expand its customer base in the Maldives. Samaranayake said the Commercial Bank is lending to some hotel projects in the Maldives through its offshore banking units.

"We are expecting to expand our customer portfolio in the Maldives this year through more lending," he said. He said establishing a branch in the Maldives is a long-term possibility.

Commercial Bank's personal banking business accounts for 77 percent of its total deposits. Housing finance together with credit cards have been the main profit making products in the personal banking sector.

Premawardhana said the bank's personal banking sector and regional diversification plans will set the pace for rapid growth during 2005.

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