The Board of Directors of ICICI Bank Limited held a meeting in Mumbai today, where they approved the principle of a merger with The Bank of Rajasthan. The process will now move on to due diligence reports and an independent valuation. These will go before the boards of both banks and then shareholders. The deal would also need to be submitted to the Reserve Bank of India (RBI) for its consideration.
According to ICICI Bank:
Bank of Rajasthan is a listed old Indian private sector bank with its corporate office at Mumbai in Maharashtra and registered office at Udaipur in Rajasthan. At March 31, 2009, Bank of Rajasthan had 463 branches and 111 ATMs, total assets of Rs. 172.24 billion, deposits of Rs. 151.87 billion and advances of Rs. 77.81 billion. It made a net profit of Rs. 1.18 billion in the year ended March 31, 2009 and a net loss of Rs. 0.10 billion in the nine months ended December 31, 2009.
ICICI Bank has entered into an agreement with certain shareholders of Bank of Rajasthan agreeing to effect the amalgamation of Bank of Rajasthan with ICICI Bank with a share exchange ratio of 25 shares of ICICI Bank for 118 shares of Bank of Rajasthan. ICICI Bank is hoping to increase its number of branches, already the largest among Indian private sector banks, as well as fortify its presence in northern and western India.
ICICI shares fell marginally yesterday by 3.85%, while Bank of Rajasthan shares soared by 20%.