Money & Banking

LVB merger with Clix Group on track; completes substantial due diligence

Our Bureau Mumbai | Updated on September 15, 2020 Published on September 15, 2020

Three multinational accounting firms are believed to be doing a valuation on behalf of LVB, according to banking sources.

Lakshmi Vilas Bank (LVB) on Tuesday said the mutual due diligence relating to the proposed amalgamation of the Clix Group with the Bank is substantially complete, and the parties are in discussions on the next steps.

The private sector bank, in a regulatory filing, observed that as per the mutual understanding between parties, the exclusivity period was extended till September 15, 2020 due to prevailing pandemic situation.

The Bank will continue to share any further information as and when they materialise,” LVB added.

The Bank is in dire need of capital as its total Capital to Risk-Weighted Assets Ratio (CRAR) as per Basel III guidelines stood at 1.12 per cent as on March-end 2020 as against the minimum regulatory requirement of 10.875 per cent.

During FY2020, many accounts of LVB slipped to the non-performing asset (NPA) category from different segments including Corporate, MSME & Retail. The total slippage during the FY 2019-20 was to the tune of ₹1,553.24 crore.

 

In percentage terms, the Gross NPA was 25.39 per cent (of gross advances), and Net NPA was at 10.04 per cent (of net advances) as at March-end 2020.

The Bank had signed a preliminary, non-binding letter of intent (LoI) with Clix Capital Services Pvt Ltd and Clix Finance India Pvt Ltd (collectively, the "Clix Group") as on June 15, 2020 to the proposed amalgamation of Clix Group with the Bank.

Under the non-binding LoI (signed as on June 15, 2020), the proposed amalgamation was subject to completion of mutual due-diligence in the exclusive window of 45 days (June 30, 2020).

The Board of Directors of the Bank in their meeting held on June 30, 2020, extended the exclusivity till September 15, 2020. The Bank then said the due diligence process and inter-party discussions have suffered unexpected delays on account of the current pandemic and the travel restrictions.

Three multinational accounting firms are believed to be doing a valuation on behalf of LVB, according to banking sources.

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Published on September 15, 2020
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