Axis Bank gets RBI nod for merger of Enam's investment bank biz

SOURCE : BL:MUMBAI, APRIL 22:

 

2011

Axis Bank has received the Reserve Bank of India's in-principle approval to merge the investment banking and equity capital market business of Enam Securities.

The RBI has, however, put conditions for the merger to go through. One of the conditions is that none of the Enam Securities shareholders, who have acquired Axis Bank shares through the share swap deal, can be on the board of the bank.

The private sector bank had moved the RBI to induct Mr Vallabh Bhansali, co-founder and Chairman of Enam Securities, on its board.

Following RBI's condition, the bank is now exploring ways of working with Mr Bhansali, said Mr Somnath Sengupta, Executive Director and Chief Financial Officer, Axis Bank. Speaking to the media while announcing the bank's fourth quarter results, Mr Sengupta said that the process of merger would take a couple of months to be completed. There would be no changes in the valuation of the transaction (merger of Enam), he added.

In November 2010, Axis Bank had announced that the investment banking and equity capital markets business of Enam Securities would be merged with Axis Securities and Sales Ltd, a wholly-owned subsidiary of the bank in all-share deal.

NET UP 33%

For the quarter ended-March 31, 2011, Axis Bank posted a net profit of Rs 1,020 crore, up 33 per cent from Rs 765 crore in the corresponding quarter last year.

For the full year 2010-11, the bank posted a net profit of Rs 3,388 crore (Rs 2,515 crore), up 35 per cent.

The growth was on account of increase in both net interest income and fee income, Mr Sengupta said.

For the year 2010-11 the bank has recommended a dividend of 140 per cent 

Govt to placate RBI on bank mergers

Source :NEW DELHI:20 OCT, 2010, 06.41AM IST,ET BUREAU 


The government on Tuesday said it will take on board the concerns of the Reserve Bank before giving powers to competition watchdog Competition Commission of India for vetting mergers of banks. 

“It (the norms) is in the process, there is no intention to delay but these are government procedures that have to be followed. The finance ministry and the RBI have to be taken on board, as they have some issues which will be considered,” corporate affairs minister Salman Khurshid said here on the sidelines of a conference. 

The minister’s comments come in the backdrop of detail in the notification of certain provisions of the Competition Act in wake of opposition from the finance ministry and the RBI on certain issues. The provisions, Mr Khurshid said, are being looked into by the Committee of Secretaries. 

"It’s gone to the Committee of Secretaries. Once they give it, their comments and recommendations, we will take it up with the Cabinet," he added. 

The RBI has called for keeping bank mergers out of the jurisdiction of the competition authority, a suggestion that also has the support of the finance ministry. 

The banking regulator has argued that any other regulators will not appreciate the complexities in banks’ mergers. However, voices within the Commission have expressed concern that exempting one sector would lead to similar demand from other sectors. 

Although the CCI became fully functional in May 2009, provisions relating to clearance of mergers are yet to be notified. 

Currently, the regulator only has powers to check abuse of dominant position and anti-competitive agreements between companies. The ministry of corporate affairs has, in the new draft sent to CoS, reduced the timeframe for vetting of M&A proposals to 180 day from the 210 days specified earlier.


 Also , companies with a turnover of Rs 750 crore and above and assets worth more than Rs 250 crore would mandatorily need to come before the CCI. 

The minister had said earlier that amended Competition Act 2002 including the new provisions , would be placed before the Parliament in the monsoon session, a timeline which could not be met.

IDBI Bank's board approves scheme of merger

SOURCE ;IIFL :Capital Market / 16:39 , Sep 09, 2010

The board of IDBI Bank in its meeting on 09 September 2010 


has approved the merger of IDBI Gilts with IDBI Bank.

Bank of Rajasthan's promoter’s name vanishes from BSE, NSE shareholders’ list

 Source :Yogesh Sapkale :ML : May21,    2010

The names of PK Tayal and his group companies are not there anymore as promoters of Bank of Rajasthan. In fact, there is no promoter mentioned for the Bank on either the BSE or NSE site

Bank of Rajasthan (BoR), which is in the news for its proposed merger with ICICI Bank Ltd, has been embroiled in various controversies in the past. While market regulator Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) had cracked the whip on the erring lender, the exchanges, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), seem to be unaware of the filings from BoR.

According to both BSE and NSE sites, PK Tayal and his associated group entities are no longer the promoters of BoR. In fact, as per BoR's filing to the exchanges, there is not a single promoter mentioned for the period to end-March 2010. Surprisingly, names of PK Tayal and eight of his group companies are there under the promoter and promoter group for the quarter ending December 2009.

The Tayal group entities such as 21st Century Entertainment Ltd, Ahmednagar Investments Pvt Ltd, Cumballa Hill Property Developers Pvt Ltd, Cyber Infosystems & Technologies Ltd, Cyberinfo Zeeboomba.Com Ltd, EDC Securities Ltd, Giriganga Investments Pvt Ltd and Sumander Property Developers Pvt Ltd, together still hold 28.61% stake in BoR. However, their names are mentioned in the “public and holding more than 1% of the total shares" category, instead of the "promoter and promoter group" category. In its ex-parte order, SEBI has labelled all these companies as ‘promoter entities of BoR’.

A note posted by BoR on the BSE site said: "Hitherto, Tayal Group holding was shown in the Promoter Category. Based on the legal opinion obtained, they are no longer being treated as Promoter of the Bank. In the absence of any other category for the dominant shareholders group (DSHG), their holding has been shown in the Public Category."

"The declared shareholding of Tayal Group is 28.60%, however, as per SEBI ex-parte interim order dated 8 March 2010, holding of Tayal Group and related entities are to the order of 55.01%," the note says.
The question is how can any group or entity be removed suddenly from one category and placed into another category? That too when the market regulator has clearly said that all these companies are "a promoter entity of BoR". More importantly, is there anyone in the exchanges who keeps a tab on the regulatory filing done by companies? When asked, after more than 24 hours, the BSE asked us to check the lender’s filing on its site.

Following the SEBI ban on about 100 entities related with the Tayal Group, BoR's managing director and chief executive officer, G Padmanabhan, had said that 'technically' the Tayals were not the Bank’s promoters.
"Legal opinion has been obtained that they are not the promoters. The Bank does not consider them as its promoters. They are just dominant shareholders in the bank," Mr Padmanabhan had said.

SEBI was peeved that the Tayals had increased their shareholding in the private sector lender to 55.01% in the October-December quarter of 2009 from 44.71% in the quarter ended June 2007, although they had claimed that they were actually divesting stake. The market regulator also said that while the promoters apparently conveyed the impression that they were reducing their shareholding, they did not, in fact, dilute their controlling stake in BoR.

The SEBI action against the Tayal Group itself came after the RBI appointed Deloitte Haskins & Sells to conduct a special audit of BoR's accounts, suspecting violation of operational norms by the lender, including transparency in lending. The RBI had also imposed a Rs25-lakh fine on the Bank alleging violation of a host of norms.

ICICI may not need FIPB nod for BoR merger

Source :BS Reporter / Mumbai May 22, 2010, 1:06 IST

ICICI Bank, may not need a go-ahead from the Foreign Investment Promotion Board (FIPB) to complete the intended merger with Bank of Rajasthan (BoR). The foreign holding in ICICI is 67 per cent.

Banking sources said the government’s Consolidated Foreign Direct Investment Policy, effective April, stipulated that in case of Indian companies in sectors such as banking, where foreign investment is capped at 74 per cent, FIPB approval will be required if control of an Indian entity (BoR in this case) is passed on to a non-resident entity.

Sources said ICICI Bank might have got a new classification as an Indian-controlled foreign bank, but it is not a non-resident entity as defined by the Foreign Exchange Management Act.

In addition, they said, another clause in the new FDI policy document allowed a merger of Indian companies once a court approved it. There was, however, a rider that the foreign shareholding in the new entity should not breach the sectoral cap.

In case of ICICI Bank, foreign holding is estimated at 67 per cent and following the merger with BoR, this would only decrease. In contrast, foreign investment in banking companies is capped at 74 per cent.

Banking sources said that given the stipulations, ICICI Bank may not need FIPB approval for the transaction. In any case, they note, the Reserve Bank of India will vet the transaction and will also look at compliance with the sectoral cap.

The issue is also expected to be discussed by the ICICI Bank board when it meets on Sunday to finalise the swap ratio for the merger.

Based on the preliminary agreement between the country’s largest private bank and some shareholders of BoR, anyone holding 4.7 shares of the old-generation private sector lender will get one share of ICICI Bank.

In this form, the deal, if approved, would increase ICICI Bank’s equity capital by 3.07 per cent, to 1.15 billion shares. The final swap ratio will, however, be based on the valuation and due diligence done by Haribhakti & Co, the valuer appointed jointly by the two banks.

AIBEA opposes proposed merger of BoR with ICICI

Source :Press Trust of India / Vadodara May 20, 2010, 20:16 IST

All India Bank Employees Association (AIBEA) today opposed the proposed Merger of Bank of Rajasthan with ICICI Bank saying it should be merged with Public Sector undertaking (PSU) bank instead of a private one.

"It is very surprising and a matter of intrigue that ICICI Bank wants to take over Bank of Rajasthan knowing that the Bank has been involved in various types of unhealthy and undesirable banking practices," AIBEA General Secretary C H Venkatachalan told PTI.


There is something that does not meet the common eye in this deal. Equally, when RBI knows well that this Bank is not being managed well by its main promoters. Why it is being glossed over and allowed to be put under the carpet by allowing this take over by ICICI Bank? he asked.

AIBEA demands a Parliamentary probe into this scam and culprits to be brought to the book, he said.

"Bank of Rajasthan is otherwise a household Bank in Rajasthan and people have faith in it. If the Bank is not doing well according to RBI, it should be put on moratorium and merged with a public sector Bank," he said.

Venkatachalam said Central government should immediately intervene in the matter and stop this unwarranted merger.

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.

AIABOF to continue fight against bank merger plan

BS Reporter / Kolkata/ Berhampur December 29, 2009,

All India Andhra Bank Officers’ Federation (AIABOF) has strongly opposed the government’s move to consolidate and merge the public sector banks (PSB) in the country and vowed to fight against it.
Stating that the move will destabilize the public sector fabrics of the banks, the general secretary of the AIABOF K.Ramakoteswar Rao said the merger and consolidation of the PSBs was not necessary when almost all the banks were earning profit and making good business.
“Despite the global economic meltdown, the Indian banking industry is doing well and earning profit and there is no need to merge or consolidate the PSBs in the country” said the president of the AIABOF, N.Raja Gopal Reddy.  “We oppose it and will fight against the government’s decision” said Rao. He was addressed at the conference of the Berhampur unit of the AIABOF here on Sunday. The Andhra Bank officers from different parts of Orissa and Andhra Pradesh attended the conference. The president of the AIABOF presided.

Bank Merger:Strike cripples banks partially

Sachin Dravekar, 17 December 2009,
NAGPUR: Banking services were partially affected on Wednesday
following the strike called by Left-affiliated unions All
 India Bank Employees ofAssociation AIBEA and
All India Bank Officers Association (AIBOA).

The union has been protesting against the move to merge State
Bank of Indore with its parent organisation State Bank of India.

Though employees from clerical grade remained absent in large
 numbers, as the AIBEA has prominent presence in this cadre,
 routine transactions could be carried out partially with
the help of members of other unions. Institutions like Bank
of Baroda and Canara Bank, where AIBEA of AIBOA do not have
 a sizeable presence, were seen working. So were the ATMs
of both private and public sector banks including those
affected by the strike.

Interestingly, the Bank of Maharashtra (BoM) kept a window
 open to sell tickets for the December 18 one-day international
 to be played at Nagpur.

Cheque clearing, which is the first casualty during such an event,
was partially effected during the strike. Out of the 50,000 cheques
on an average daily, 33,196 cheques were presented in the
Reserve Bank of India's (RBI's), national clearing cell on Wednesday. T
he cheques valued at Rs 150 crore in all, as against those
valuing Rs 200 crore being presented on a normal day.

The MICR centre, which assorts the cheques below Rs 1 lakh,
 did not function at all. The centre run by Punjab National Bank (PNB),
 processes around 50,000 cheques in a day. A trip around the regional

offices of PSU banks showed a skeletal staff manning the workplaces.
"Around 80% of staff is affiliated to the AIBEA, so the work has
almost come to a standstill," said an official at the Bank of India.

Source:pti

Government steps forward to support public sector banks to merge

14-Dec-2009

Indian Finance Minister Pranab Mukherjee stated  that Government will support public sector banks to  merge, provided they fulfilled RBI and SEBI (Securities and Exchange Board of India) guidelines. “If someone decides to merge, if we see it is in conformity  with our policy and if we find that parameters are being followed as per the SEBI and RBI guidelines”, then government would play a “supportive role”, he said in reply to a calling attention in the Lok Sabha. “The current policy of the government on consolidation  leaves the initiative for consolidation to come from the  management of the banks themselves, with the government  playing a supportive role as the common shareholder,” he said,  asserting that no directive on consolidation was being issued  by the government or the RBI. The boards of the banks have to take a decision in this  regard “based on the synergy levels of merging or consolidating entities”, he said. The attention motion was moved by CPI leader Gurudas  Dasgupta who asked whether the government had taken any  initiative “overtly or covertly” to merge various public sector banks resulting in “discontent” amongst the bank employees. Dasgupta gave the example of the move for merger of State  Bank of India and State Bank of Indore. He also said the move was being opposed by the Madhya Pradesh government. He pointed out that there was no government interference in the normal day-to-day financial and commercial activities of the  state-owned banks, he said, “We are giving them managerial  autonomy. We cannot give them a directive that doesn’t merge.” Mukherjee said consolidation was a “continuous process” as  mergers had occurred during “every regime”. Mentioning that the banking system had “undergone major  changes” since nationalization, he said the State Banks of  Travancore-Cochin, Bikaner and Saurashtra were doing a  “good job” and were being optimistic to do better. Dasgupta said mergers would not only lead to monopoly  and lower competition in the banking sector, it would also lead to dropping access to banking for the greater part of people. Source: Live Mint

Bank staff plan on-day strike on Dec 16

11 Dec 2009, 1326 hrs IST,


MUMBAI: About 600,000 employees of India's banks
 plan to go on a one-day strike on Dec. 16 to 
protest the move to merge state-owned
banks.

"We are against any move for merger and consolidation
 in the banking industry," C.H. Venkatachalam, general
secretary of All India Bank Employees Association (AIBEA)
told news agency.

"We term the move as closure of public sector banks," he said.

The employees were also protesting the ongoing move to merge
State Bank of Indore with its founder State Bank of India,
 the country's largest bank, he added.

Earlier, Indian Banks Association, the apex banker's body,
said it got a notice from All India Bank Officers'
Association and AIBEA informing its members working
in state-owned, private and foreign banks would strike
work on Dec 16.

State-run Corporation Bank also informed stock exchanges
normal functioning in bank branches may be affected owing to the strike.
Source: REUTERS