Page 7 - Banking Finance May 2019 N

BANK UPDATE

Indiabulls Housing to buy Union Bank of India raises Rs. 426 crore from share sale
Lakshmi Vilas Bank to employees
The proposed merger of Lakshmi Union Bank of India has raised Rs 426 crore from its share sales to employees against
a target of about Rs 470 crore. The public sector bank has
Vilas Bank
allotted 7.29 crore equity shares at Rs 58.49 a share to
with Indiabulls
Housing Fi- employees under the Employees Stock Purchase Scheme
(ESPS), it said in a regulatory filing to stock exchanges.
nance will cre-
ate a much It had put eight crore equity shares of face value Rs 10
stronger entity. Once the application on sale. ESPS has been one of the prevalent ways of rais-
is submitted, the RBI could take at ing capital over the past six months as part of their effort in bringing down gov-
least a month to decide on the pro- ernment holding below 75%. However, promoter holding has not been a com-
posed merger. pelling issue was not for Union Bank as the government held 67.43% as on
December last year.
In a statement, LVB said there was
no prior notification to the RBI. The bank has received Rs 4112 crore by placing shares at Rs 78.84 to the gov-
"While the Board has unanimously ernment on preferential basis as part of the bank recapitalisation plan. This will
approved the resolution, the RBI raise the government holding but this may not breach the 75% mark. Securities
Nominee Directors, as is the practice & Exchange Board of India mandates every listed company to have minimum
at the bank, did not have to partici- 25% public shareholding.
pate in the voting or express any
views," it said, adding that the pro- SBI wasting Indian taxpayers' money on legal fees:
cess of applying to the RBI is now on Mallya
hand.
Vijay Mallya once again used social media to reiterate his offer to pay back the
An analyst, who did not wish to be debt owed to public sector banks in India, targeting this time
named, said: "Typically, the RBI has the State Bank of India (SBI) for allegedly wasting Indian tax-
not been very keen on allowing real payers' money on expensive legal fees in the UK.
estate players in the banking sector. Days after a UK High Court judge refused to dismiss an in-
But given the financial situation of
terim order freezing nearly £260,000 in one of his London
Lakshmi Vilas Bank, this could be a bank accounts, the 63-year-old issued a string of statements
way out. The analyst also pointed on Twitter to allege that the SBI-led consortium of PSU banks were wrongly
out that Indiabulls Housing had un- going after him in the UK courts. "SBI lawyers in UK making presentations on
successfully applied for a banking li- their accomplishments against me. Indian tax payers cost. Despite full recovery
cence in 2013. in India confirmed by the Prime Minister himself," he tweeted.
But since then, Indiabulls Housing Fi-
nance bought 40 per cent stake in Banks want 90% lenders' nod for resolution
British lender OakNorth Bank in Banks have urged the Reserve Bank of India (RBI) to make only a small relax-
2015 with two nominees on its ation in the new norms for stressed assets by requiring consent of 90% of lend-
Board "after intense PRA [Bank of ers for approving a resolution plan instead of 100% mandated in the last year's
England] scrutiny on fit and proper". controversial circular, which was quashed by the Supreme Court recently.
IBH has also made a case for its eli-
The recommendation of the Indian Banks' Association (IBA) to RBI about the
gibility for a banking licence from the lenders' consent clause has dismayed industry. Companies were hoping for a
RBI in the investor presentation re- much bigger relaxation in rules and many executives fear that the year-long
leased when the deal was an-
legal battle that culminated in the Supreme Court's order this month would fall
nounced; pointing out that it has a flat if IBA's view prevails. IBA chief executive VG Kannan told that 90% limit is
successful track record of over 20 the safest bet as the chances of the dissenting lenders moving the project to
years. insolvency court will reduce.

BANKING FINANCE | MAY | 2019 | 7