Bank of Rajasthan to merge with ICICI Bank

 

Source: Money Life: May 18, 2010 06:37 PM

BoR plunged into a crisis early this year after the RBI slapped a Rs25-lakh fine on the bank for alleged violation of various norms

Trouble-torn Bank of Rajasthan (BoR) today announced that it would merge with India's largest private sector lender ICICI Bank, reports PTI.
An agreement for amalgamation was reached today between ICICI Bank and BoR, which as per today's share price is valued at Rs1,500 crore.
BoR shares surged 20% to Rs99.50 following the development.
Bank of Rajasthan said in a notification to the stock exchanges that its controlling shareholders, the Tayal family, "have entered into an agreement on 18 May 2010, with the ICICI Bank for proposing an amalgamation of both."
BoR promoters, the Tayal family had recently run into regulatory trouble with the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) over its stake holding, which had risen contrary to the impression it conveyed.
The Tayal family has about 55% stake and it needs to bring it down to 10% to meet RBI guidelines.
The boards of both the banks met today on the merger.
BoR, one of the oldest private sector banks in the country, plunged into a crisis early this year after the RBI slapped a Rs25-lakh fine on the bank for alleged violation of various norms.
These include irregularities in transactions and misrepresentation of documents, norms pertaining to anti-money laundering, Know Your Customer (KYC) and irregularities in the conduct of accounts of a corporate group.
RBI also appointed Deloitte Haskins and Sells to conduct a special audit of the bank, which recently submitted its interim report to the central bank.
In March, SEBI banned 100 entities including Tayal Group firms from all stock market-related activities for fraudulently hiking the promoter holding in the bank, while conveying the impression that they were reducing their shareholding.
Incepted in 1943, BoR has a network of over 463 branches and a customer-base of over 20 lakh. In the December quarter, the bank's net profit declined to Rs44.7 crore as against Rs49.21 crore in the year-ago period while its total income dropped to Rs373.7 crore from Rs419.8 crore.
ICICI Bank has a network of over 2,000 branches.