Boards approve ICICI Bank, Bank of Rajasthan merger
24 May 2010
The boards of ICICI Bank and Bank of Rajasthan on Sunday sealed the deal for the merger of the two, under a share exchange formula arrived at last week. me cleared the merger proposal between the two. This will be the third acquisition of an old private sector bank by ICICI Bank, the country's largest private sector bank.
At a meeting in Mumbai, the two boards finalised the proposed a share swap ratio of 1:4.72, which means BoR shareholders will gain one share of ICICI Bank for every 4.72 shares of BoR. This exchange formula was recommended by chartered accountants Haribhakti & Co after due diligence and valuation of BoR.
Both banks have called for an extraordinary general meeting of shareholders on 21 June to approve the deal. ICICI Bank managing director and chief executive Chanda Kochhar said, ''We need shareholders' and RBI's approval. As per legal advice, FIPB permission is not required.'' However, the deal is subject to approval of the Reserve Bank of India.
ICICI Bank in a statement said its board considered the results of the due diligence covering advances, investments, deposits, properties and branches and employee-related liabilities, and the valuation report of Haribhakti & Co. Haribhakti had recommended a share exchange ratio of one ICICI Bank share for 4.70-4.80 shares of BoR. The board had on 18 May approved an exchange ratio of 25 shares of ICICI Bank for 118 shares of BoR. This works out to one ICICI Bank share for 4.72 BoR shares, and falls within the range recommended by Haribhakti, the statement said.
A BoR director said the board passed the resolution along with RBI nominees. The board currently has five RBI-nominated directors, including the chief executive officer. The bank has appointed a three-member team of directors - Nitin Narotamdas Goel, KN Bhandari and Vipul Dhirajlal Mehta - to help in the bank's integration.
Kochhar said the deal said would not increase ICICI Bank's bad loan ratio. ''We found the accounts quite satisfactory after the due diligence by Deloitte. We looked at the loans and advances, investments, properties and the deposit profile. We looked at a case-by-case analysis of around 80 per cent of the loans and broadly, it's been quite satisfactory. The bank has well-diversified loans and advances. It has close to three million customers and has a granular deposit structure. The CASA (current account savings account) is at around 30 per cent,'' she said.