LVB's tier-1 capital ratio turned negative at 0.88 per cent and 1.83 per cent as of March 2020 and June 2020, respectively, compared to the minimum requirement of 8.875 per cent.
Capital-starved private sector lender Lakshmi Vilas Bank, whose chief executive was voted out by shareholders recently, on Thursday said it has received a non-binding offer from Aion-backed non-banking finance firm Clix Group for a merger.
The old-generation Chennai-based private sector bank, which has been on the lookout for an investor and capital for long, was jolted on September 25 when its shareholders voted out seven directors of its board, including CEO S Sundar and promoters K R Pradeep and N Saiprasad.
Following this, the Reserve Bank of India (RBI) appointed a three-member team to run the bank under Meeta Makhan as chairperson and Shakti Sinha and Satish Kumar Kalra as members.
In an exchange filing on Thursday, the bank’s Chief Financial Officer K Hariharan said, “Further to the process of considering and evaluating the proposed amalgamation with Clix Capital Services, Clix Finance and Clix Housing Finance, we are glad to inform that the bank has received an indicative non-binding offer from the Clix Group.” The filing did not elaborate that.
The Clix Group is backed by the private equity major Aion Capital.
On September 15, LVB said it had agreed for an amalgamation with the mid-sized non-banking lender Clix Capital Group in an all-share deal.
Earlier, the bank had tried to merge with Srei Capital and then with Indiabulls Housing Finance, but the RBI objected to the merger proposals.
Mid-June, the bank and the New Delhi-based Clix Group had entered into a non-binding agreement for amalgamation and then in late July, the parties extended the validity of the agreement to September 15 citing the lockdowns.
If the merger happens, the networth of the bank will more than double to Rs 3,100 crore from the current Rs 1,200 crore. Clix Capital has a networth of Rs 1,900 crore that will become the networth of the bank after the deal.
LVB’s tier-1 capital ratio turned negative at 0.88 per cent and 1.83 per cent as of March 2020 and June 2020, respectively, compared to the minimum requirement of 8.875 per cent.
A board member had on September 15 told PTI that they would shortly appoint a valuer to finalise the share-swap agreement and hope to seek the regulatory approvals, especially from the RBI, after that.
“We hope to get the board approvals by October 10 and then seek the RBI approval,” the board member had said, adding that none of the existing promoters of the bank will exit as part of the amalgamation.
LVB had been dogged by high bad loans and the attendant regulatory curbs since 2018. Last week, it said its board had approved fundraising plans for Rs 1,500 crore and also to increase foreign shareholding up to 74 per cent from the current 12.35 per cent.
The bank posted a net loss of Rs 112.28 crore in the June 2020 quarter, against a loss of Rs 237.25 crore. Its earning per share (EPS) was (-)3.33 per cent.
Almost a fourth of its advances are dud assets now with gross non-performing assets of 25.40 per cent of in June 2020, against 17.30 per cent a year ago, and total deposits were pegged at Rs 21,161 crore.
Lakshmi Vilas Bank’s shares on Thursday rallied 7.23 per cent to close at Rs 17.80 apiece on the BSE, giving it a market valuation of Rs 599 crore.