IDBI Bank is believed to have zeroed in on Kerala-based private sector lender Federal Bank for acquisition.
IDBI has also completed due diligence, an exercise undertaken by the acquirer to assess the value of the entity before purchasing it, a source close to the development said.
However, when contacted by FE, Yogesh Agarwal, CMD of IDBI, said, ?It is just a fishing expedition by media?. Agarwal refused to comment anything further.
Without confirming about the bank?s plan to acquire Federal Bank, a reliable source said the due diligence process of 5-6 potential banks was on.
When contacted, Federal Bank MD & CEO M Venugopal declined to comment as well. Sources point out that Federal Bank hasn’t heard anything from IDBI Bank.
?We would like to acquire banks and not get acquired,? said a senior official of the bank.
The acquisition, if it materialises, would enable IDBI to consolidate its position among state-run banks by strengthening key segments such as branch network,human resources and client acquisition, besides augmenting its deposit-base.
With 641 branches, the Federal Bank is on e of the largest private sector banks in the south with a total business of around Rs 59,000 crore and deposits of Rs 33,439 crore.
IDBI Bank, which had acquired United Western Bank a few years ago, has been on the look out for another private sector bank with a strong deposit-base and technology advantage.
The bank, the source said, had initially shortlisted a host of medium-sized banks like South Indian Bank, Karnataka Bank and Bank of Rajasthan along with Federal Bank as potential acquisition targets.
IDBI Bank narrowed down on the Federal Bank after assessing its financial strength and possibilities of seamless integration in terms of work culture, the source said.
Recently, IDBI Bank chairman & managing director Yogesh Agarwal had spoken about the bank identifying a private sector lender and completing due diligence.
?It is a private sector bank…talks are on. Due diligence has been done. I cannot commit on the time-frame,? Agarwal had said.
IDBI Bank, which was a financial institution before transforming itself into a commercial bank, had approached the government to seek funds to fuel its ongoing business expansion plans, estimated at between Rs 15,000-16,000 crore over the next three-four-years. The exercise could include a rights issue during 2010-11.
