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ICICIBanktobuyBankofRajasthanLivemint

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15 September 2016 | E-Paper

ICICI BANK

BANK OF RAJASTHAN

DELOITTE HASKINS AND SELLS

RESERVE BANK

PRAVIN TAYAL

ICICI Bank to buy Bank of Rajasthan

ICICI Bank to buy Bank of Rajasthan
Anita Bhoir
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First Published: Tue, May 18 2010. 11 04 PM IST

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Updated: Tue, May 18 2010. 11 04 PM IST

Mumbai: Shareholders of the troubled Bank
of Rajasthan Ltd (BoR) are set to get 25
shares of ICICI Bank Ltd for 118 shares of
BoR in the ratio of 4.72:1, after the boards of
the two banks decided to go ahead with a
merger.
This is based on an internal analysis of the
strategic value of the proposed
amalgamation, average market
capitalization per branch of old private
sector banks and relevant precedent
transactions, an ICICI Bank release said,
after its board gave its in-principle approval
to the proposal.
BoR promoter Pravin Kumar Tayal termed
the proposed merger as a win-win
situation for allthe banks, their employees and investors.
In a day of high drama, BoR stock rose 19.95% on the Bombay Stock Exchange to close at
Rs99.50, its year high, and after trading hours, the bank sent a release to the stock
exchanges saying its board will meet in the evening to discuss a proposal of merging
the bank with ICICI Bank.
Boads of both banks met in the evening separately, and after the meeting ICICI Bank
sent a release, saying, it has entered into an agreement with certain shareholders of
Bank of Rajasthan agreeing to effect the amalgamation of Bank of Rajasthan with
itself.
ICICI Bank stock was down 1.45% to Rs889.35.
Audit rm Haribhakti and Co. and Deloitte Haskins and Sells will assess the valuation of
Bank of Rajasthan and the boards of both banks will meet on 23 May to seal the deal.
The nal determination of the share exchange ratio is subject to due diligence,
independent valuation, ICICI Bank said.
Also See A History of Mergers (Graphic)
Most banking analysts said the currently proposed swap ratio is highly favourable to
Bank of Rajasthan shareholders.

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A back-of-the-envelope calculation by analysts values the deal at more than Rs3,000

crore and per branch acquisition cost at Rs7 crore for ICICI Bank, almost equivalent to
ICICIs per branch opening cost.
ICICI Bank, Indias second largest lender, is among banks that held talks to buy a
controlling stake in Bank of Rajasthan, The Economic Times reported on 6 May.
This will be ICICI Banks third acquisition after Bank of Madura in 2000-01 and Sangli
Bank in 2006-07. The rst acquisition helped ICICI Bank step up its presence in the
south and the second in the west. The BoR acquisition will strengthen its network in
northern as well as western India.
BoR has a network of 463 branches and 111 ATMs. About 60% of its branches are in
Rajasthan. ICICI Bank, Indias largest private sector lender, has a network of 2,009
branches and 5,219 ATMs.
ICICI Bank has an asset base of Rs3.63 trillion and posted a net prot of Rs4,025 crore in
2010. BoRs asset base is Rs17,224 crore and in rst nine months of scal 2010, its net
loss was Rs9.82 crore. It posted a net loss of Rs44.70 crore for the December quarter and
has not announced March quarter earnings.
BoRs net non-performing assets as a percentage of total loans in December was 1.05%.
The comparable gure for ICICI Bank for the year-end is 1.55%.
The proposed amalgamation would substantially enhance ICICI Banks branch network,
already the largest among Indian private sector banks, and especially strengthen its
presence in northern and western India. It would combine Bank of Rajasthans branch
franchise with ICICI Banks strong capital base, the ICICI Bank release said.
Indias capital markets regulator in March banned BoR promoter Tayal and about 100
companies and people associated with his family from trading in securities for
improper disclosure about their holdings in the bank.
According to the Securities and Exchange Board of India, the Tayal family owned 55.01%
of the bank in December, even though Tayal claimed his group stake was 28.06%.
BoR has also been under the scanner of the Reserve Bank of India (RBI) for alleged
violation of banking regulations, including those on corporate governance.
G. Padmanabhan, BoR managing director and chief executive ofcer, was appointed by
RBI in November for two years with a mandate to improve corporate governance
practices at the bank.
RBI has also ordered two major audits of the bank.

Graphic by Yogseh Kumar / Mint

Anup Roy contributed to this story.
First Published: Tue, May 18 2010. 11 04 PM IST

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