The Hindu Business Line : ICICI Bank shareholders okay merger

THE shareholders of ICICI Bank Ltd have approved the scheme for amalgamation of the bank with ICICI Ltd, ICICI Capital Services Ltd and ICICI Personal Financial Services Ltd.

The scheme was approved "by an overwhelming majority" with 99 per cent of votes being cast in favour of the resolution by shareholders present and voting, an official statement from ICICI Bank said here today, on the result of poll at Friday's meeting in Vadodara, held under the Gujarat High Court's order.

"The scheme is further subject to the approval of shareholders of ICICI at their meeting to be held on January 30, the approval of the High Courts at Ahmedabad and Mumbai, Reserve Bank of India and such other authorities as may be required. The scheme would come into effect from the date on which RBI's approval becomes effective," the statement said.

It was on October 25, 2001, that ICICI Ltd officially disclosed its decision to take the final step towards universal banking, announcing that its board and that of ICICI Bank would take up a proposal to reverse-merge the FI with its banking subsidiary, at separate meetings scheduled the very next day.

The proposal also envisaged merging ICICI Personal Financial Services Ltd and ICICI Capital Services Ltd with the bank. If all goes well for ICICI, it could transform itself into a financial services behemoth with assets of more than Rs 95,000 crore. The company was expected to become the first entity in India to offer almost every financial product, wholesale and retail, under one roof.

ICICI Bank was seen as gaining access to the retail-lending portfolio of ICICI, apart from the benefit of a large balance sheet. For ICICI, the reverse-merger meant access to the low-cost funds of the bank.

On October 26, 2001, the boards of ICICI and ICICI Bank approved a share swap ratio of one equity share of ICICI Bank for two equity shares of ICICI, for the proposed reverse-merger. ADS holders of ICICI were to get five ADS of ICICI Bank in exchange for four ADS of ICICI.

At ICICI Bank, the proposed merger for universal banking would be the second such structural change of the last couple of years, it having acquired Bank of Madura in December 2000 in an all-stock deal.

After that merger, ICICI's holding in the bank was diluted to 55.6 per cent from the pre-merger level of 62.6 per cent. As reported after the board approvals for reverse-merger, ICICI had 46 per cent equity in ICICI Bank, the stake assigned to be held in a trust for the benefit of the merged entity and divested through appropriate placement in fiscal 2003.

On October 27, 2001, the board of Industrial Development Bank of India (IDBI) also cleared a proposal to transform the FI into a universal bank, the preferred route being merger with a bank, private or public.

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ICICI Bank shareholders okay merger