The Hindu Business Line : ICICI Bank board to take up Sangli Bank merger today

The board of directors of ICICI Bank will meet on December 9 to consider the proposal for amalgamation of Sangli Bank with itself, said a release from ICICI Bank.

Sangli Bank has been in trouble for quite sometime. The bank's capital adequacy ratio plummeted to 1.64 per cent as on March 31, 2006, against 9.30 per cent in the previous year. The minimum requirement mandated by the RBI is 9 per cent.

The Tier-I capital of the bank shrunk to 0.82 per cent (6.44 per cent), while Tier-II dived to 0.82 per cent (2.86 per cent) over the same period. It posted a net loss of Rs 29.27 crore (loss of Rs 31.31 crore) as on March 31, 2006. Net non-performing assets of Sangli Bank were at Rs 20.79 crore (Rs 34.82 crore).

Sangli Bank, set up by the Raja of Sangli State in 1916, has 192 branches. The bank has a major presence in Maharashtra and thin outfits in Karnataka, Gujarat, Andhra Pradesh, Tamil Nadu, Delhi and Goa.

The proposed merger comes close on the heels of the merger of United Western Bank with IDBI Ltd. ICICI Bank was the first among several suitors to express its intent to acquire United Western Bank.

For ICICI Bank, the merger will provide the much-needed expansion in branch network and boost in rural lending. The acquisition of weak banks seems to be the way to getting round the RBI restrictions on opening new branches.

ICICI Bank and HDFC Bank and other private sector banks allegedly involved in the IPO scam have found it difficult to secure licences from the RBI, said a banking analyst. With the proposed acquisition, the branch network of ICICI Bank will jump from the current 630 branches to 822 branches.

It recently received the RBI's nod for opening new branches and additional off-site ATMs.

The bank is also keen on expanding its rural portfolio, which grew by about 70 per cent on a year-on-year basis. It can also expand its priority sector lending, said the analyst.

Sangli Bank's deposits stand at Rs 2,004.23 crore (Rs 1,984.90 crore) and advances were Rs 888.29 crore (Rs 811.92 crore) as on March 31, 2006.

The bank has a capital base of Rs 23.56 crore (Rs 22.30 crore). The staff strength stood at 1,923 employees as of end March 2005.

ICICI Bank's scrip closed at Rs 876.70 on Friday, down from the previous close of Rs 878.20.

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