LIC completes IDBI acquisition

WITH THE acquisition of controlling stake by LIC, IDBI Bank will now become private sector lender. THE NUMBER of public sector lenders has come down to 20 with the government transferring its majority stake in favour of LIC.

New Delhi, Jan. 21: Insurance behemoth LIC on Monday completed the acquisition of 51 per cent controlling stake in IDBI Bank, marking the entry of more than 60 years old state-owned insurer into the banking space.

With the acquisition of controlling stake by LIC, IDBI Bank will now become a private sector lender. The number of public sector lenders has come down to 20 with the government transferring its majority stake in favour of LIC.

“The deal, conceptualised in June 2018, is envisaged as a win-win situation for both IDBI Bank and LIC with an opportunity to create enormous value for shareholders, customers & employees of both entities through mutual synergies,” IDBI Bank said in a BSE filing.

In August last year, the Union Cabinet approved the acquisition of controlling stake by Life Insurance Corporation (LIC) as a promoter in the bank through a combination of preferential allotment and open offer of equity.

LIC had been looking to enter the banking space by acquiring a majority stake in IDBI Bank, as the

deal is expected to provide business synergies despite the lender’s stressed balance sheet.

The bank had reported a net loss of `3,602.49 crore during the September quarter of 2018-19. Its gross non-performing assets hit 31.78 per cent (`60,875.49 crore) of the gross advances as on September 30, 2018, as compared with 24.98 per cent in the year-ago period.

IDBI Bank has about 1.5 crore retail customers and about 18,000 employees. With this deal, LIC will have a strategic investment in a large bancassurance channel, thereby increasing its productivity and reducing distribution costs.