IDBI pips 16 cos to win UWB
The merger scheme requires IDBI to pay in cash Rs 28 per share in respect of every fully paid-up share in UWB to investors.india Updated: Sep 13, 2006 11:00 IST
IDBI Ltd has beaten 16 players in the initial round of the race for merging the ailing United Western Bank with itself as RBI on Tuesday announced a draft scheme of amalgamation between the two entities.
As per the draft scheme, IDBI will have to make an upfront payment in cash of Rs 28 per share in respect of every fully paid-up share in UWB to investors as on prescribed date, which will be decided by the government later.
Market sources said IDBI will have to pay Rs 150.50 crore to UWB shareholders. The payment made to UWB investors will be considered as provision for bad debt, the scheme says.
The sources also said that Maharashtra government's development financial institution Sicom Ltd, which owns 10 per cent stake in UWB, will negotiate for better price deal for the beleaguered bank.
The books and balance sheets will have to be prepared as on September 2, when Maharashtra-based UWB was placed under moratorium after its capital base eroded because of growing losses.
Meanwhile, UWB executive members are meeting at the headquarters of the bank in Satara, Maharashtra to discuss the draft scheme, a bank source told PTI.
IDBI Chairman V P Shetty said, "We will be getting a strong branch network belonging to UWB." He, however, did not comment on other aspects of the draft amalgamation scheme.
Among 17 entities that evinced interest in taking over or restructuring UWB were ICICI Bank, Canara Bank, Federal Bank, IndiaBulls, Andhra Bank, Federal Bank and Sicom.