THE usually low-profile Dao Heng Bank has successfully sought a banking partner by acquiring the Overseas Trust Bank, and is now seeking another major financial institution as shareholding partner for the enlarged bank. ''At some point in time, it will bring an added value to the bank by taking up a major financial institution as partner,'' Guoco Group managing director Werner Makowski said. He said such a partner would increase the bank's gearing without necessarily pushing up overhead costs, adding that raising overheads was a major impediment to expansion. He said some parties had shown interest in teaming up with Dao Heng Bank, but no agreement had been reached. Analysts suggest that both banks' loan-to-deposit ratios are relatively low, with estimates putting the ratio of the enlarged bank at just 50 per cent, a relatively conservative level compared with other Hongkong institutions. A strong partner would then provide finance for an acquisition and allow the enlarged bank to become a more aggressive lender, which would translate into higher profits. ''The low loan-to-deposit ratio means that the enlarged bank will have plenty of room for organic growth that will generate higher productivity and profitability,'' Mr Makowski said. At present, the enlarged bank has enough resources to build on both banks' strengths and increase their competitive edge in the market. The Government announced last Friday that Guoco would but the Government-run Overseas Trust Bank. Following the philosophy that Dao Heng has to achieve ''a critical mass'' to be competitive in Hongkong's banking environment, Guoco has beaten some formidable competitors in the race to win OTB. It is not only the extensive network that makes the two banks a good match, but also the complementary business that is alluring to Guoco's directors. ''With OTB's credit card business, we can extend this to our clients and double the customer base in a short time,'' Mr Makowski said. Dao Heng is also eyeing possible synergies from OTB's trade finance, especially the factoring business. OTB is among the few banks in Hongkong to provide this type of financing. Since about 32 per cent of Dao Heng's loan portfolio is for trade finance, and OTB has an even higher proportion, this area would receive strong emphasis, Mr Makowski said. This combined strength is expected to provide a big boost to the activities of Guoco's London operations. Guoco acquired Britain's Benchmark Bank in July last year which was then renamed Dao Heng Bank (London). It has two branches and will concentrate on trade finance and treasury activities. ''We want to make it an Asian trade finance bank through serving our Asian customers doing business in Europe and those European companies trading in Asia,'' he said. Treasury activity will receive renewed impetus when the two banks merge. ''With a larger capital base, we can do much more on the treasury side. This will bring in more off-balance-sheet income to the enlarged bank,'' he said. One condition of the takeover states that the two banks would be run as separate legal entities for two years. ''We will build on each other's strength and generate growth and profit from the symbiotic relationship between the two banks,'' Mr Makowski said. During the two-year familiarisation period, credit policies, personnel management and other aspects of the operations will be examined. ''First, we will seek a convergence of goals and aspirations for the enlarged banking group, and will adopt the best for the group,'' he said.