ICICI Bank to sell stake- NRI deposits account for around 40 per cent

Monday, 13 September , 2004, 12:38
Asian CERC

ICICI Bank has initiated talks with private equity investors and foreign banks to sell its 20.44 per cent stake in Federal Bank. According to sources, the bank is in talks with 3-4 big private equity investors in the country, including NewBridge Capital and Chrysalis Capital. Besides, two European banks, which are major players in the Indian market, have also shown interest in the stake. The bank is looking at a valuation of over two times the book or over Rs 600 per share. The book value of the bank is at around Rs 300. The Federal Bank scrip closed on the Bombay Stock Exchange on Sept 10 at Rs 302.8. However, the hitch is that investors may not be allowed to carry out due diligence of the bank.

Soon after the Reserve Bank of India had issued the discussion paper on ownership in private sector banks, ICICI Bank had written to the central bank asking for a three-year timeframe to sell its stakes in Federal and South Indian Bank. Sources said that RBI is firm on the issue of capping private sector banks holding stakes in other banks at 5 per cent. Former parent ICICI took a stake in Federal Bank in 1993 when it stepped in as a white knight and picked up the stake at around Rs 105 per share. ICICI Bank also has an 11.25 per cent stake in South Indian Bank. ICICI Bank is the single largest shareholder in both South Indian Bank and Federal Bank. The stake sale could take time, as investors are looking at the final guidelines on ownership in private banks. Federal Bank has a branch network of over 430 branches and its non-performing assets have come down to less than 3 per cent (to 2.89 per cent) as of March 31, '04. Also, NRI deposits account for around 40 per cent of the bank's deposits. Banks, financial institutions and insurance companies have a 21.46 per cent stake in Federal Bank, while FIIs have a 7.11 per ent The public stake stands at 44.51 per cent.


	ICICI Bank to sell stake in Federal Bank-also NRI deposits account for around 40 per cent of the bank's deposits Monday, 13 September , 2004, 12:38 Asian CERC ICICI Bank has initiated talks with private equity investors and foreign banks to sell its 20.44 per cent stake in Federal Bank. According to sources, the bank is in talks with 3-4 big private equity investors in the country, including NewBridge Capital and Chrysalis Capital. Besides, two European banks, which are major players in the Indian market, have also shown interest in the stake. The bank is looking at a valuation of over two times the book or over Rs 600 per share. The book value of the bank is at around Rs 300. The Federal Bank scrip closed on the Bombay Stock Exchange on Sept 10 at Rs 302.8. However, the hitch is that investors may not be allowed to carry out due diligence of the bank. Soon after the Reserve Bank of India had issued the discussion paper on ownership in private sector banks, ICICI Bank had written to the central bank asking for a three-year timeframe to sell its stakes in Federal and South Indian Bank. Sources said that RBI is firm on the issue of capping private sector banks holding stakes in other banks at 5 per cent. Former parent ICICI took a stake in Federal Bank in 1993 when it stepped in as a white knight and picked up the stake at around Rs 105 per share. ICICI Bank also has an 11.25 per cent stake in South Indian Bank. ICICI Bank is the single largest shareholder in both South Indian Bank and Federal Bank. The stake sale could take time, as investors are looking at the final guidelines on ownership in private banks. Federal Bank has a branch network of over 430 branches and its non-performing assets have come down to less than 3 per cent (to 2.89 per cent) as of March 31, '04. Also, NRI deposits account for around 40 per cent of the bank's deposits. Banks, financial institutions and insurance companies have a 21.46 per cent stake in Federal Bank, while FIIs have a 7.11 per ent The public stake stands at 44.51 per cent.