MUMBAI, JANUARY 16: ICICI Bank has called off the due diligence exercise of Centurion Bank. Sources close to the exercise said ICICI Bank has shelved the plan to take over Centurion Bank following differences over the swap ratio. "It is unlikely that ICICI Bank will open the talks in near future," sources said. ICICI Bank managing director and CEO HN Sinor declined to comment on the issue.Incidentally, ICICI Bank had earlier backed out from taking over TimesBank after conducting the due diligence exercise. Finally, HDFC Bank took over TimesBank.
The Reserve Bank of India is expected to clear the merger of TimesBank with HDFC Bank. The merger was passed at the extraordinary general meetings of the two banks held on January 1 and 7. Even though the talks with Centurion Bank has been called off, ICICI Bank is understood to have set its sight on new takeover targets. "The bank has decided to take the route of acquisition for growth. The list of probable takeover targets even includes a public sector bank,"sources said under condition of anonymity.
ICICI Bank is also devising ways of bringing down the promoter's stake from the present level of 74.25 per cent. The move follows the RBI stipulation directing promoters of private sector banks to bring down their stakes to below 40 per cent. Insiders in the bank do not rule out a possible divestment in favour of an overseas strategic partner. "The bank is weighing all options. The bank may enter the capital market for the second time with a public issue.
Alternatively, there could be a rights issue and the promoters will renounce the offer in favour of others. The third possibility is roping in a strategic partner," sources said.
If the bank's board is unable to finalise the plan of bringing down the promoter's stake immediately, it will seek more time from the RBI.
New generation private sector banks were required to reduce the promoters' stake within two years of commencing operations. However, depressed market conditions provided them with an excuse todelay the exercise. Till date, only HDFC Bank and Global Trust Bank have been able to meet this criteria.The merger with Centurion Bank would have helped ICICI Bank to bring down the promoter's stake. Centurion Bank has a large overseas institutional holding, which would have enabled ICICI Bank to broadbase its equity base.
ICICI holds 74.25 stake in the bank, Unit Trust India 13.11 per cent, foreign institutional investors (FIIs) 1.48 per cent, public sector banks 1.16 per cent while the public holds 13.11 per cent stake.
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