BoB has bought the stakes of the two banks--33 per cent each--for Rs 72 crore. It has paid a 55 per cent "goodwill" premium to buy the stakes, sources said.

The move to buy out the banks' stakes was triggered by the Hongkong Monetary Authority's decision not to allow a multi-parent financial institution in Hong Kong. The Reserve Bank of India persuaded BoB to pick up the stakes of the banks and turn IBU International into a wholly owned subsidiary, the sources said.

Banking analysts, however, question the deal's pricing. "IBU Hongkong has posted losses. The bank could have picked up the stakes at a cheaper price," a senior analyst said.

"The bank has paid the mutually agreed price consideration for acquiring the two-third shareholdings of Indian Bank and Union Bank of India, after obtaining the permission of the RBIand Hongkong Monetary Authority for takeover of IBU International Finance Ltd," said a BoB release on Friday.

"The bank will be able to leverage its presence in 14 nations across the globe to enhance the performance of the subsidiary in Hong Kong, by synergising the operational links and business opportunities with countries where it has a huge presence. The bank will be able to take advantage of its forex business mainly in exchange dealings to maximise profits, efficiently utilise large foreign currency resources and enhance shareholders' value," the release added.