The Hindu Business Line : ING to surrender banking licence

DUTCH banking and insurance major, ING Bank N.V. will cease to exist as a separate entity. The foreign bank is in the process of being merged with the Bangalore-based, ING Vysya Bank. The final paper work is on and the foreign bank is soon to submit its banking licence to the Reserve Bank of India.

"The ING group made its investment in Vysya Bank with the intention of merging the two. This was always the game plan. It is not due to the recent regulatory changes," said Mr Bart Hellemans, MD & CEO, ING Vysya Bank.

Recent regulations laid down by the Government also would not permit a foreign bank to co-exist alongside a subsidiary. Although ING Vysya Bank is not technically a subsidiary of ING yet since it holds only 44 per cent in it, the larger game plan may include ING taking up its stake to the now permissible FDI limit of 74 per cent. In that case, ING Bank N.V. would have had to shut shop.

The recent Government notification on revision of existing sectoral guidelines and equity cap on FDI states that: A foreign bank may operate in India through only one of the three channels viz., (i) branch/es (ii) a wholly-owned subsidiary and (iii) a subsidiary with aggregate foreign investment up to a maximum of 74 per cent in a private bank.

The two branches of ING Bank in Mumbai and New Delhi have been re-branded as branches of ING Vysya Bank. The private bank has also absorbed all the 55 employees of the foreign bank. The prominent functionalities of ING Bank of private banking, corporate finance and investment banking have all been transferred to ING Vysya Bank. The merger process commenced over a year ago.

ING made its initial purchase in Bangalore-based, Vysya Bank through its group outfit, Bank Brussels Lambert which initially picked up 9.99 per cent stake in Vysya Bank. This was increased to 20 per cent in August 1999 with infusion of Rs 33 crore through the preferential share route.

In June 2002 ING further purchased an additional 24 per cent in Vysya Bank from its previous Indian promoter the Vasavi GMR group. The deal was done for a sum of Rs 340 crore at Rs 626.92 per share. ING also changed the bank's name and branding to ING Vysya Bank using the international logo of ING, the orange coloured lion.

The shareholding pattern of the bank as in December 2003 was: 34.15 per cent ING Mauritius Holdings, 9.78 per cent ING Mauritius Investments, 19.77 per cent FIIs, 16.55 per cent Indian public, 5 per cent International Finance Corporation and 5 per cent NRIs/OCBs, 0.31 per cent Indian promoter.

The total foreign holding in the bank is pegged at 73.7 per cent, which is within the 75 per cent cap.

More Stories on : Mergers & Acquisitions | Foreign Banks | Private Banks

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