ICICI Bank to exit Russia with sale of banking unit to lender Sovcombank
06 December 2014
ICICI Bank, India's largest private-sector lender, plans to sell its Russian subsidiary ICICI Bank Eurasia Limited Liability Company (IBEL) to Sovcombank, a mid-sized Russian bank.
ICICI Bank did not give any reasons for selling this profitable subsidiary, nor did it reveal the financial terms of the deal, but said, "The purchase price will be determined on the transaction completion date based on the financial statements of IBEL at that date.
The transaction is expected to close by the end of the financial year, subject to execution of definitive agreements and regulatory approvals.
''The sale is subject to execution of definitive agreements and regulatory approvals. The purchase price will be determined on the transaction completion date based on the financial statements of IBEL at that date. The transaction is expected to conclude by the end of the financial year,'' ICICI Bank said in a notification to the exchanges.
IBEL's profit after tax in the six months ended 30 September was 28 million roubles. The Russian subsidiary accounted for less than 0.1 per cent of ICICI Bank's consolidated total assets at the end of 30 September 2014 and consolidated profit after tax for the six-month period ending September 2014.
As of March 2014, 48.8 per cent of IBEL's book was loans to companies and banks whereas retail loans constituted 24.9 per cent. The lender's capital adequacy ratio at the end of March was 42.9 per cent. At that time, ICICI Bank had an investment of Rs300 crore in IBEL.
ICICI Bank had acquired Investitsionno-Kreditny Bank for an undisclosed amount in 2005. With this deal, the lender acquired assets worth $4.4 million.
Over the past few years, ICICI Bank has been cutting its stake in its overseas subsidiaries.
It has trimmed its equity investment in its UK and Canada arms to seven per cent of its net worth, from 11 per cent in the past four years, the management said in a conference call with analysts after the fourth-quarter results last year.
The lender has been repatriating money from its overseas banking subsidiaries to optimise the capital invested in these businesses.
ICICI Bank is India's largest private sector bank with total assets of Rs 5,94,642 crore as on 31 March 2014, while its total revenue and net profit for the last fiscal stood at Rs 54,606 crore and Rs 9,810 crore, respectively.
The bank was originally promoted in 1994 by ICICI Ltd, an Indian financial institution, and was its wholly-owned subsidiary till 2002, when ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, merged with with ICICI Bank.