India’s second largest Private sector Bank – ICICI again in the queue of acquiring other banks. The Bank will acquire Bank of Rajasthan. It would be the 3rd acquisition by ICICI bank in the last decade.
Chanda Kochhar who is the ICICI Bank MD & CEO talks to ET, “We have reached an indicative pricing with the promoters on a swap ratio of 25:118. (A BoR shareholder will receive 25 ICICI shares for every 118 BoR shares held.) This is, however, subject to due diligence. Our understanding of the strategic value is that it would have taken us three years to build the current account and savings account relationships. Also, the deal prices the market capitalisation per branch in the range of around Rs 6.5 crore, which is similar to other old private sector banks.”
Further economictimes.indiatimes.com, an online news portal about economy and business writes, “The indicative price of Rs 188 according to the share swap would be a steep jump compared with the current market price. The ICICI Bank scrip on Tuesday closed at Rs 889.35 on the Bombay Stock Exchange, down by 1.45% while the BoR scrip rose sharply by 19.95% to Rs 99.5. The current market capitalisation of the bank is around Rs 1,604 crore and a price of Rs 188 would value BoR at Rs 3,032 crore.
Given ICICI Bank’s market capitalisation of Rs 99,125 crore, the bank will have to dilute its equity by less than 3%. ICICI Bank will propose a share-swap transaction with BoR.”
In the analysis of bank branches the news portal writes, “BoR currently has around 466 branches, of which around 280 are in Rajasthan. The move would also offer ICICI Bank a decent network across north India in states like Madhya Pradesh, Haryana, Uttar Pradesh and even Delhi where Bank of Rajasthan has over 20 branches.
ICICI Bank currently has around 2,000 branches of its own. The bank, because of its earlier acquisitions of Bank of Madura in 2000-01 and Sangli Bank in 2006-07, has a good network of branches in the south and west.”
In the analysis of the acquisition the news portal writes, “Interestingly, before the economic downturn, ICICI had considered the possibility of taking over BoR. But the deal fell through as ICICI was unwilling to fork out the money Mr Tayal had asked for. ICICI currently has a high capital adequacy ratio of 19.41% while BoR has a ratio of 11.71% as on December 31.”
Merge of Bank of Rajasthan in ICICI will be the biggest acquisition of capital in the recent history. It is the indication of power and strength of banking capital. It will be known as the biggest acquisition of banking sector. The acquisition will make capitalist development very clear in India. Growth in banking sector can be seen with the hikes in deposit rates of Dhanalakshmi bank.
Chanda Kochhar who is the ICICI Bank MD & CEO talks to ET, “We have reached an indicative pricing with the promoters on a swap ratio of 25:118. (A BoR shareholder will receive 25 ICICI shares for every 118 BoR shares held.) This is, however, subject to due diligence. Our understanding of the strategic value is that it would have taken us three years to build the current account and savings account relationships. Also, the deal prices the market capitalisation per branch in the range of around Rs 6.5 crore, which is similar to other old private sector banks.”
Further economictimes.indiatimes.com, an online news portal about economy and business writes, “The indicative price of Rs 188 according to the share swap would be a steep jump compared with the current market price. The ICICI Bank scrip on Tuesday closed at Rs 889.35 on the Bombay Stock Exchange, down by 1.45% while the BoR scrip rose sharply by 19.95% to Rs 99.5. The current market capitalisation of the bank is around Rs 1,604 crore and a price of Rs 188 would value BoR at Rs 3,032 crore.
Given ICICI Bank’s market capitalisation of Rs 99,125 crore, the bank will have to dilute its equity by less than 3%. ICICI Bank will propose a share-swap transaction with BoR.”
In the analysis of bank branches the news portal writes, “BoR currently has around 466 branches, of which around 280 are in Rajasthan. The move would also offer ICICI Bank a decent network across north India in states like Madhya Pradesh, Haryana, Uttar Pradesh and even Delhi where Bank of Rajasthan has over 20 branches.
ICICI Bank currently has around 2,000 branches of its own. The bank, because of its earlier acquisitions of Bank of Madura in 2000-01 and Sangli Bank in 2006-07, has a good network of branches in the south and west.”
In the analysis of the acquisition the news portal writes, “Interestingly, before the economic downturn, ICICI had considered the possibility of taking over BoR. But the deal fell through as ICICI was unwilling to fork out the money Mr Tayal had asked for. ICICI currently has a high capital adequacy ratio of 19.41% while BoR has a ratio of 11.71% as on December 31.”
Merge of Bank of Rajasthan in ICICI will be the biggest acquisition of capital in the recent history. It is the indication of power and strength of banking capital. It will be known as the biggest acquisition of banking sector. The acquisition will make capitalist development very clear in India. Growth in banking sector can be seen with the hikes in deposit rates of Dhanalakshmi bank.