Karur Vysya Bank (KVB), one of the old generation private sector lenders based in Tamil Nadu, has sold its entire stake in the cash-rich City Union Bank (CUB), another old generation private sector bank headquartered in Kumbakonam in Tamil Nadu, in the open market. KVB sold its entire share holding in City Union Bank between the second and third quarters of FY2011.
This had put to rest the market speculation about a possible takeover bid by KVB for the control of City Union Bank after the Reserve Bank of India spelt out its guidelines for the shareholding pattern of private sector banks. However, KVB officials had earlier maintained that investment in the equity of City Union Bank was purely financial in nature. City Union Bank does not have any domestic or foreign promoters leading to speculation about a possible takeover of the smaller bank by one the big players.
According to information available with FE, KVB had sold its entire 58,13,743 shares which translates into 1.45% stake in City Union Bank between the second and third quarter of the last fiscal. According to market sources, KVB had sold the stake in the open market and the sale might have netted KVB a good return on its investment in City Union Bank.
Public sector insurance behemoth Life Insurance Corporation of India (LIC) is the single largest stake holder in the promoter less City Union Bank.
As of the quarter ended December last, LIC tops the shareholders chart in CUB with 4.94% stake followed by L&T Capital which holds 4.76% stake. Danish investment fund Nederlandse Financierings- Maatschappij Voor Ontwikkelingslanden NV, better known as FMO is the third largest shareholder in CUB with 4.65% stake and the San Francisco head quartered emerging market equity investor Agronaut Ventures holds 4.33% stake.