Bank of Rajasthan to merge with ICICI Bank

Bank of Rajasthan (BoR), has decided to merge the old private sector bank with the country’s second-largest lender, ICICI Bank. This would be the third acquisition by ICICI Bank in the last decade. Both the bank boards have given an in-principle nod to the merger. ICICI Bank has started a due diligence exercise on BoR from Tuesday. ICICI Bank MD & CEO Chanda Kochhar said, “We have reached an indicative pricing with the promoters on a swap ratio of 25:118. (A BoR shareholder will receive 25 ICICI shares for every 118 BoR shares held.) This is, however, subject to due diligence. Our understanding of the strategic value is that it would have taken us three years to build the current account and savings account relationships. Also, the deal prices the market capitalisation per branch in the range of around Rs 6.5 crore, which is similar to other old private sector banks.”

In the case of HDFC Bank, which acquired Centurion Bank of Punjab, the price per branch was around Rs 26 crore. “It was a brief board meeting. An in-principle approval has been taken to amalgamate the bank with ICICI Bank. The majority shareholder is looking at swapping his official shareholding of 28.60% with ICICI Bank shares. Other details on valuation and share swap will be decided on May 24,” said BoR MD & CEO G Padmanabhan. The Tayals, who acquired BoR a decade ago in a messy transaction, are believed to be under pressure to sell the old private bank amid regulatory action by Sebi and RBI. Mr Padmanabhan was appointed by RBI, which recently slapped a fine on BoR for a string of violations including deletion of records in the IT system, shady property deals and irregularities in a particular corporate group account.