The Hindu Business Line : UWB okays Rs 350-cr rehab package

To the rescue
Rs 350-cr package offered by SICOM, Maharashtra Govt
SICOM owns 9.7 pc stake in United Western
UWB seeks to maintain independent identity

Mumbai , Sept 6

Up against a Thursday deadline to submit a rehabilitation plan to the Reserve Bank of India, the board of the troubled United Western Bank (UWB), which met here today, approved a package offered by SICOM and the Maharashtra Government.

The Rs 350-crore rehabilitation package was a joint offer from SICOM, the Maharashtra Government and another financial institution, said Mr R.M. Premkumar, Chairman of SICOM. He refused to name the financial institution.

SICOM, a financial institution promoted by the Maharashtra Government, owns 9.7 per cent stake in UWB.

UWB was placed under moratorium on Saturday by the Government following intimation from the RBI that the bank's depositors were in jeopardy, the bank's net worth having fallen below the prescribed limit of Rs 300 crore and its capital adequacy ratio being negative. Banking analysts are sceptical of the RBI approving a rehabilitation package from the existing promoters. Since investors' confidence in the promoters is already shaky, this could lead to a run on the bank, they said.

Meanwhile, the list of potential buyers for UWB got longer on Wednesday, with Bank of Maharashtra joining the fray.

For Bank of Maharashtra, the growth potential after acquisition is huge, said Mr M.D. Mallaya, Chairman and Managing Director.

"There is scope for increasing the business up to Rs 10,000 crore. UWB has a strong retail base of about 15 lakh customers and a high proportion of low-cost accounts (35 per cent)."

Bank of Maharashtra would not be hit substantially by the high NPAs and losses as the risk weighted asset base of UWB is about Rs 450 crore, he added.

Since the bank is also present widely in Maharashtra, there is some branch network overlap with UWB, said Mr Mallaya. "But the similarities between the two from the cultural and ethnic point of view are the same. This will facilitate amalgamation."

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Fresh spurt of rains likely in Kerala, TN

Prices of pulses zoom; more crop damage feared

Sundaram BPO arm-ETA venture to tap Gulf BPO biz

BSNL offers pre-paid scheme on fixed line

India moves up in World Bank's `Doing Business' rankings

Easier exposure limit for infrastructure lending sought

Cognizant acquires US co AimNet

12K in sight; metal stocks have good outing

Amtek India: Quiet buying seen

UWB okays Rs 350-cr rehab package

United Western Bank: A failure well flagged

New drug policy to arm regulator with more teeth

Cardamom planters float new company for direct marketing