Kolkata: Public sector UCO Bank is in talks with foreign companies to foray into non-life insurance business, a top bank official said. In the insurance venture, UCO would like have another public sector bank also as a partner. Besides, the bank would start a stock market derivative unit within its treasury wing during the next financial year.

UCO Bank chairman and managing director SK Goel told reporters on Sunday that the bank was talking to a few foreign companies for entering into the non-life insurance business which it plans to start during 2009-10. He said Liberty of USA, Engine of Italy and a few Japanese players had shown interest in starting the non-life venture with UCO.

Goel said in the insurance venture, UCO would like have another public sector bank as a partner. “We want to have at least 26% equity in the venture as UCO will not like to be a sleeping partner,” he said. At the most, UCO would extend its stake to 30%, he said.

“Once our targets of achieving a net and gross NPA of 1% and 2% respectively were achieved in the next financial year, we will enter the non-life insurance business,” Goel said. “We are confident of achieving the target,” he added. The net and gross NPA of the bank stands at 2.6% and 3.7% respectively.

UCO is selling insurance products through the bancassurance route which does not involve risk sharing.

Talking about the derivatives, Goel said that during the next financial year, the bank would start a stock market derivatives units within its treasury wing.
Depending upon the success, the bank would go for full-fledged derivatives operations by setting up a joint venture with a partner. Besides stock market derivatives, the bank was also looking at commodity and bullion markets derivatives.

Asked about UCO’s capital recast plan, he said that it had been approved by the finance ministry and was awaiting approval of the cabinet. “We expect to get the cabinet nod in the first week of January,” Goel said.

Upon getting the nod, UCO would hit the market with a follow-on public offer by March 31, 2008, to raise around Rs 450 crore to Rs 500 crore. “This would help UCO in meeting Basel II norms. The capital adequacy ratio will go up to 12.75% after the issue”, Goel said.

Source : PTI