ManagementIDBI Bank moves ahead on bank buy
IDBI Bank had completed due diligence on a private bank for a possible acquisition, Chairman and Managing Director Yogesh Agarwal said today. “Talks are on. Due diligence has been done. I cannot commit on the time-frame,” he said on the sidelines of Bancon 2009-10.
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The statement pushed up the bank’s share price to Rs 139.90, against yesterday’s closing price of Rs 134.25 on the Bombay Stock Exchange. The stock, however, closed 0.48 per cent lower at Rs 133.60.
In November, the bank had said it had identified a potential merger target even as it abandoned the plan to sell its home finance arm. After its conversion into a bank in October 2004, IDBI merged IDBI Bank with itself in 2005. In 2006, it acquired United Western Bank.
The bank, which has estimated its total capital requirement at Rs 15,000 crore over the next three years, expects to get Rs 7,500-8,000 crore from the government. However, the government has deferred plan to provide more capital to public sector banks until the next financial year.
At the end of March 2009, IDBI Bank’s capital adequacy ratio was 11.57 per cent. The government has said it will provide capital to public sector banks to ensure that they attain a capital adequacy ratio of 12 per cent, though the Reserve Bank of India has mandated a capital adequacy ratio of 9 per cent.
Agarwal’s statement came within minutes of Financial Services Secretary R Gopalan saying the government will bless synergy-based consolidation among public sector banks.
Though IDBI Bank is not among the largest in the public sector space, it is unlikely to be a merger candidate. This is because at the time of conversion of IDBI into a bank, it had assured Parliament that the new entity would not be merged with another bank.
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: NOV 26: IDBI Bank identifies merger candidate