Express press service
BENGALURU: In a bid to serve more customers and meet all their financial needs, banks are launching or partnering/acquiring asset management companies (AMCs) and insurance subsidiaries.
Recently, Bandhan Financial Holdings Limited (BFHL), investment companies GIC and ChrysCapital signed an agreement with IDFC Limited to acquire its AMC and also IDFC AMC Trustee Company for a consideration of R4,500 crore.
Anil Singhvi, Chairman of IDFC Limited, said Bandhan Consortium, with its strong brand and resources, will further strengthen product distribution and improve the overall experience for IDFC AMC investors and distributors.
Analysts who follow bank acquisitions have said that one of the main benefits of this is value creation. “If you are a pure banker and also have a financial services offering, the valuation of banks generally increases. Also, there are more bank customers than AMC customers, and you can sell AMC products to them and also earn commissions,” an analyst said.
Bank of Baroda is the majority shareholder of IndiaFirst Life Insurance Co. In the area of asset management, the bank recently entered into a strategic partnership with BNP Paribas Asset Management, combining the strengths of their respective asset management businesses. assets in India, to form Baroda BNP Paribas Mutual Funds.
Vikramaditya Singh Khichi, Executive Director of Bank of Baroda, said banks offer a comprehensive range of financial products and services to customers in a bid to achieve their financial goals.
“Increasingly, customer preference trends indicate a tendency to opt for a financial institution that can meet a customer’s composite financial needs. Banks, being trusted and reputable organizations in the financial sector, have the capacity to meet these varied requirements by offering financial products ranging from deposits, credit, investments to protection,” he said.
Mutual fund and insurance subsidiaries enable banks to tap into the potential by providing specialized value-added financial services to investors and thus expand the customer base.
Banks can join an MF branch or have their own subsidiaries.
Most of the time, a large bank prefers to have its own subsidiary, as it is said to be a win-win situation for its customers as well as its shareholders. From Kotak, HDFC, ICICI to SBI, all major banks have their own AMCs. Recently, Bank of India acquired a balanced stake in BOI AXA Investment Managers.
No less than 11 of the 43 AMCs are owned by a bank or a banking joint venture. These 11 AMCs (excluding IDFC which also goes to a bank) together account for 41% of the R 38.83 lakh crore of the industry average AUM at the end of March 2022.
Having MF and insurance subsidiaries allows the bank to add additional value to its customers. The Indian market offers significant opportunities.