ICICI chief pats SBI on consolidation plan

ICICI Bank on Tuesday complemented rival State Bank of India on its ongoing consolidation exercise, saying merging associate banks with itself would give the public sector bank "greater opportunities". ICICI Bank managing director and CEO K.V. Kamath, however, feels no desire to overtake SBI to become the largest bank in India, saying that "overtaking someone is a negative goal as it can involve undesirable short cuts."
Asked about the exercise initiated by SBI to merge its associate banks with it, Mr Kamath said that "SBI may have had indirect control over its subsidiaries already, but the merger would certainly give it lot more opportunities, such as consolidation which can bring in better efficiency." On impact of consolidation on ICICI, Mr Kamath said that there would not be any effect on his institution, where he believes the growth driver is efficiency and productivity. "In the process if we can overtake (SBI) it will be incidental."
Late last month, the SBI board approved the merger of State Bank of Saurashtra, while there are plans to merge other associate banks. Mr Kamath, however felt that there were lots of opportunities for the public sector banks. On the issue of further hitting the equity market, Mr Kamath said that the bank has no plans to go for it for at least three years and that the bank was in a comfortable position to meet credit demand.
"If the economy grows at a high pace then the banking services sector also grows... in case the economy grows by about ten per cent annually, the financial services sector will grow by 25-30 per cent. This would mean doubling the size of the institution in three years," he quipped. He said that the follow-up equity issue had given the bank sufficient flexibility to meet the credit requirement of its insurance and mutual fund business.