LIC may get management control of IDBI Bank
Life Insurance Corporation of India (LIC) is seeking management control of government-owned IDBI Bank, after saying it wishes to take a controlling 51 per cent stake in the latter. The request in this regard for promoter status was discussed by IDBI's board of directors on Tuesday, said B Sriram, managing director and chief executive of the bank. NIKHAT HETAVKAR & SOMESH JHA report
Life Insurance Corporation of India (LIC) is seeking management control of government-owned IDBI Bank, after said it wishes to take a controlling 51 per cent stake in the latter.
The request in this regard for promoter status was discussed by IDBI’s board of directors on Tuesday, said B Sriram, managing director and chief executive of the bank. The rights to be given could include nominees on the board of the ailing lender and influence strategy, senior executives said.
Asked about his stay, Sriram told journalists, “My tenure ends on September 30 and I intend to complete it.” He was non- committal on whether he would be reappointed.
The letter from LIC, also government-owned, expresses interest in taking the said stake via preferential allotment of shares or open offer. The valuation will depend on the method chosen.
Sriram said all further action would be after the response of the Government of India. The latter owns 85.96 per cent of IDBI; LIC has 7.98 per cent as of end-June, according to filings with the BSE exchange.
Government sources said it would take five or six months for IDBI to take all the regulatory approvals, after which the preferential shares could be issued.
The bank will need to amend its Articles of Association. Union Cabinet approval would be needed to reduce the government’s stake below 51 per cent. This okay could take about a month, sources said.
IDBI Bank MD B Sriram said further action would be after a response comes from the govt
IDBI will further seek a nod from its other shareholders, the Reserve Bank and the Securities and Exchange Board of India. The bank will have to issue a postal ballot notice and hold a separate general meeting of its stakeholders. It has already sought shareholders’ nod to raise capital up to ~50 billion by issuing new shares through various routes, including Qualified Institutional Placement. Its annual general meeting is slated for August 13.