Business Daily from THE HINDU group of publications
Monday, Sep 04, 2006
Business Daily from THE HINDU group of publications Monday, Sep 04, 2006 |
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Money & Banking - Mergers & Acquisitions
Our Bureau
Merger on horizon UWB has accumulated losses of Rs 200 crore Many of UWB's 230 branches are in rural, semi-urban areas Merger to help ICICI Bank's foray into rural lending
Mumbai , Sept 3 ICICI Bank proposes to take over United Western Bank (UWB), which was put under moratorium on Saturday. The board of ICICI Bank will meet on Monday to consider a proposal to merge the Satara-based bank with itself. In a release, ICICI Bank said: "The board of directors of ICICI Bank Ltd will meet on Monday to consider whether an expression of interest should be submitted to the Reserve Bank of India for amalgamation of United Western Bank Ltd with ICICI Bank Ltd." Some other banks, including the Kerala-based Federal Bank, have also shown interest in taking over the ailing bank, which incurred losses of more than Rs 100 crore last fiscal. However, ICICI Bank is the first one to officially announce its intention and convene a board meeting to consider a takeover. The Chairman of Federal Bank had indicated that the bank would be interested in taking over UWB. This year, Federal Bank took over Ganesh Bank of Kurundwad, a Maharashtra-based sick bank. Banking sources said that ICICI Bank would be better placed to absorb the accumulated losses of UWB (about Rs 200 crore). According to banking analysts, takeover of United Western will help ICICI Bank expand its retail base. A large number of UWB's 230 branches are in rural and semi-urban areas. ICICI Bank has been planning a major foray into agricultural and rural lending. The branch network of UWB will come in handy in achieving the target in this sector, said an analyst. ICICI Bank's rural asset base is currently worth around Rs 18,000 crore and is expected to grow. Earlier, the bank had said that it was looking at expanding its rural delivery channel through branches at major agriculture centres and through partnership with microfinance institutions. ICICI Bank currently has 80 branches in Maharashtra, which could go up beyond 300 if the RBI and the Government okay the merger. ICICI Bank had earlier held equity stake in Federal Bank and South Indian Bank, which it had to divest following RBI regulations on cross-holding of stakes in banks. Our Chennai Bureau adds: Corporation Bank is `seriously looking' at the option of bidding for taking over United Western Bank, the bank's Chairman and Managing Director, Mr B. Sambamurthy, told Business Line on Sunday. He, however, stressed that the bank had to "look at the numbers" before taking a firm decision on it. Noting that United Western was "one of the many options" that Corporation Bank had, Mr Sambamurthy said that United Western had branches in western Maharashtra, where Corporation Bank had little presence. Sources in the banking industry said that Corporation Bank's entry into the fray would bring a public sector bank in the picture.
Related Stories: More Stories on : Private Banks | Mergers & Acquisitions | ICICI Bank Ltd
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