Financial Daily from THE HINDU group of publications
Friday, Aug 12, 2005
Money & Banking - Mergers & Acquisitions
ICICI Bank to divest entire stake in Federal Bank, SIB
Kolkata, Aug. 11
ICICI Bank will divest its entire stake in Federal Bank and South Indian Bank (SIB) within the next two years, according to Mr K.V. Kamath, Managing Director and CEO.
He was talking to reporters after addressing the members of the Indian Chamber of Commerce on Thursday. He said the ICICI Bank's stake in these two organisations had always remained as just an investment.
He, however, felt that the time had come to get out of these two banks. Referring to Federal Bank, he said, ICICI Bank wanted to clean that organisation and it had been done in the last few years.
"The balance sheet of this bank is clean. So, we feel that we should divest our share in it. We would do it within the next two years. We would follow whatever the regulator would ask us to do," Mr Kamath said.
When asked whether ICICI Bank would immediately start divesting its stake, Mr Kamath was non-committal. He also did not specify the modus-operandi of the divestment exercise. "We are looking at all sorts of options and we will announce it accordingly," he said.
At present, ICICI Bank holds approximately 20.6 per cent in the Alappuzha-based Federal Bank and around 11 per cent in the Kochi-based South Indian Bank. In both these organisations, ICICI Bank's stake is clubbed as the promoter's share.
Recently, Reserve Bank of India had restricted cross-holdings among banks to five per cent and the excess holdings had to be divested in the next two years. The apex bank is currently holding talks with the banks individually and working out each divestment programme.
ICICI Bank, however, would not like to hold on even to the five per cent, allowed by RBI. Mr Kamath categorically said that his bank would divest all its shares in these two organisations.
According to Mr Kamath, South Indian Bank too had cleaned its balance sheet and improved its operations. So, ICICI Bank would sell its share in it. However, unlike Federal Bank, here he said that ICICI Bank might start divesting its stake "from tomorrow" itself.
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