The Hindu Business Line : ICICI Bank’s holding company plan suffers further setback

Mumbai, Feb 1 ICICI Bank’s plans to set up an intermediate holding company suffered another setback as the bank’s agreement for raising money overseas through a private placement expired on January 31.

The bank had to call off the agreement as it could not get Reserve Bank of India’s approval for the holding company.

In a notice to the BSE today, the bank said, “The new subsidiary was proposed for transfer of ICICI Bank’s equity shareholding in ICICI Prudential Life Insurance Company Ltd, ICICI Prudential Asset Management Company Ltd, and ICICI Prudential Trust Ltd. The arrangement was subject to the receipt of regulatory and other approvals including that of the Reserve Bank of India, the Insurance Regulatory and Development Authority and the Foreign Investment Promotion Board, and was to terminate failing receipt of such approvals within a mutually agreed date. The agreed date has elapsed and approval of Reserve Bank of India has not been received.”

ICICI Bank had got commitments from foreign investors to sell 5.9 per cent of stake in the proposed holding company for a sum of Rs 2,650 crore, said a senior official from the bank. This had valued the holding company at $11 billion post equity.

Govt, IRDA approvals

While it got approvals from IRDA and the Union Government for the company, the RBI has been dragging its feet over the issue since August 2007.

The first date for the termination of the commitments was on November 30, which the bank extended till January 31, said the official.

Whether the bank would still consider the private placement route to raise funds for the holding company would be evaluated later, the official said.

“While the banks’ capability to provide growth capital will not be affected, the only factor of concern is the fact that not more than 20 per cent of the networth can be used for non-banking business, which includes overseas operations,” the official said.

But plans of unlocking value in the group business maybe a way around this, he added.

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