LIC hikes stake in IOB to 12% from 9.96%

Written by Sajan C Kumar | Chennai | Updated: Mar 19 2010, 09:28am hrs
Life Insurance Coporations' (LIC), which has been reportedly planning to make a foray into the banking sector, has hiked its stake in the Chennai-based public sector lender Indian Overseas Bank (IOB) to close to 12%.

LIC has bought additional shares of IOB from the open market in different tranches. The Insurance Regulatory & Development Authority (Irda) had capped the life insurer's exposure to a single company at 10% level sometime back. Though LIC had subsequently sought a review, Irda has not yet relaxed the norms.

The insurance behemoth has bought close to 2% stake through market purchase. Post transaction, LICs share in IOB went up to 11.97% from 9.96%. The insurance major bought 1,08,41,158 shares and the tansaction was executed on BSE and NSE platforms. In a regulatory filing with exchanges, IOB informed that LIC now holds 6,52,02,526 shares (11.97%) in IOB. Prior to transaction LIC was holding 5,42,61, 368 shares in the bank. The government holds 61.23% in the bank, while Citigroup Global Markets Mauritius Pvt Ltd has 1.59% equity shares, apart from LIC. The total public shareholding in the bank has been at 38.77%. IOB stocks closed at Rs 88 on NSE on Thursday

In 2009, IOB took over Pune-based Shree Suvarna Sahakari Bank, which was founded in 1969. Way back in 2001, it had acquired Mumbai-based Adarsha Janata Sahakari Bank. In the quarter ended December 2009, IOB posted a 73.7% drop in its net profit at Rs 101.70 crore as compared to Rs 388.44 crore in the same quarter last fiscal.

As of the quarter ending December 2009, LIC was holding stakes in key public sector banks such as Canara Bank (5.87%), Bank of India (7.65), SBI (10.53,) Corporation Bank (26.32) PNB (9.15), Bank of Baroda (7.94), Oriental Bank of Commerce (13.58), Syndicate Bank (10.35), Allahabad Bank (10.94), Dena Bank (5.77 )and Andhra Bank (9.86). Among the private sector banks, LIC had equity shares in HDFC Bank (7.02), ICICI Bank (10.35) and Federal Bank (4.39%), among others.