The boards of ICICI Bank and Bank of Rajasthan (BoR) on Sunday approved the merger of the latter with India?s largest private sector bank in a no-cash deal that is valued at about Rs 3,000 crore. The banks have agreed on a final swap ratio of 1: 4.72?one share of ICICI Bank for 4.72 shares of BoR- for the merger.
The board considered the results of due diligence covering advances, investments, deposits, properties and branches and employee-related liabilities, and the valuation report of Haribhakti & Co, to arrive at such a swap ratio, said Chanda Kochhar, managing director & CEO of ICICI Bank, adding the bank has to seek permission from RBI and will hold its EGM on June 21 ?As per our legal advise we do not need to go to the government for the approval of the Foreign Investment Promotion Board,? said Kochhar.
This is the first take over by ICICI Bank after Kochhar took over as CEO.
Speaking to FE, Kochhar said BoR is a value buying and not a bailout proposition. BoR will add 3 million customers and start contributing to the profit of ICICI Bank from next year. ?By diluting 3% equity , we are adding 25 % of more branch network at one go. BoR will augment ICICI Bank?s loan book and deposits by around 8% each. We have now the largest number of branches among the private sector banks,? she added.
ICICI Bank?s valuation of BoR is on the basis of Rs 6 crore per branch On BoR?s sticky assets, Kochhar said, ?We have verified all the details?. Pravin Tayal, who was asked by RBI to dilute family?s over 55 % equity to about 10%, said ?no decision? has been taken on his representation the ICICI board after the merger. ?I respect the amalgamation scheme decided by the Board,? he said.
With BoR board approving the swap ratio the proposal will now go to the Extraordinary General Meeting (EGM) slated on June 21, BoR director KN Bhandari said.
Asked whether the merger will adversely impact BoR employees, Bhandari said, ?All BoR employees will be retained and there will no job losses.?
