Business Daily from THE HINDU group of publications
Saturday, Jun 30, 2007
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Business Daily from THE HINDU group of publications Saturday, Jun 30, 2007 ePaper |
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Public Sector Banks Money & Banking - Mergers & Acquisitions Markets - Stocks
Government bought 59.73 per cent stake for Rs 35,531.33 crore. Will also buy RBI’s 72.5 per cent stake in Nabard and 100 per cent stake in NHB.
Our Bureau New Delhi, June 29 In its biggest-ever cash purchase, the Government on Friday acquired the Reserve Bank of India’s entire 59.73 per cent stake in State Bank of India (SBI) for a total consideration of about Rs 35,531.33 crore. Although SEBI’s takeover regulations were not applicable for the transaction, for the sake of greater transparency, the valuation of RBI stake in SBI was worked out as per SEBI guidelines taking February 28, 2007 as the ‘reference date’. This was the day on which the decision of the Government to acquire RBI stake in SBI was announced by the Finance Minister, Mr P. Chidambaram, in his Budget speech.
SBI is the largest commercial bank in the country. As per the transaction concluded today, the Government has acquired 31,43,39,200 equity shares with a face value of Rs 10 each at Rs 1,130.35 per share at a total amount of Rs 35,531,33,14,720. The Government has also decided to acquire RBI’s 72.5 per cent stake in Nabard and 100 per cent stake in National Housing Bank by June 2008. Narasimham panel
The Narasimham Committee II on banking sector reforms had observed that it was inconsistent with the principles of effective supervision that the regulator was also an owner of a bank and this would require the RBI to divest its holding in banks and financial institutions. Ownership transfer
In its Monetary and Credit Policy for the year 2001-02, the RBI announced its intention to transfer the ownership of shares in SBI, NHB and Nabard in favour of the Government. The Finance Minister, in his Budget Speech for the year 2007-08, announced the Government’s proposal to acquire the entire stake of RBI in SBI, and provided a sum of Rs 40,000 crore for the transfer of holdings to the Government. An Ordinance was promulgated on June 21 to provide requisite statutory provisions in State Bank of India Act, 1955, to facilitate this transaction, and the Government appointed June 29, 2007 as the date for transfer of stake. SBI’s shares closed at Rs 1,525.80 on the National Stock Exchange on Friday, which is Rs 54.70 higher than the previous day close of Rs 1,471.10.
Related Stories: More Stories on : Public Sector Banks | Mergers & Acquisitions | Stocks | State Bank of India | Regulatory Bodies & Rulings
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