DBS exits HDFC Bank, Deutsche Sec steps in

Singapore-based lender DBS Bank today sold off its entire stake in HDFC Bank, while Deutsche Securities Mauritius picked up 3.78 million shares in the country’s second largest private sector bank.

DBS Bank sold HDFC Bank’s 11.62 million shares, equivalent to a 2.7 per cent stake, at Rs 1,111.04 per share realising around Rs 1,291 crore through the bulk deal. The shares were acquired by the Singapore-based bank in March 2005 when they were trading at around Rs 600.

“We have divested our 2.7 per cent stake in HDFC, a portfolio investment, as we believe that this is an opportune time to divest the shares,” a DBS spokesperson said. Sources said that the sale did not reflect diminished interest in India and DBS would go ahead with its plans for the country.

Deutsche Securities Mauritius' share acquisition was done on behalf of overseas investors and not for Deutsche Bank, market sources said. The 3,782,799 shares account for 0.88 per cent stake in HDFC Bank.

When contacted, a Deutsche Bank India and HDFC Bank spokespersons refused to comment.

The stake buy is unlikely to have any implications.

As of March 31, 2009, the promoters and promoter groups held a 23.94 per cent stake in HDFC Bank, whereas foreign institutional investors owned 31.75 per cent.

Associates of other banks also hold shares in Indian private banks. For instance, at March-end, HSBC Financial Services held 4.9 per cent each in Axis Bank and Yes Bank. Similarly, ING Bank held a 3.09 per cent stake in Kotak Mahindra Bank. Besides, RaboBank was a major shareholder in Yes Bank with over 18 per cent stake in the private sector lender.

According to the Reserve Bank of India guidelines, foreign players can hold up to 74 per cent stake in Indian banks. Besides, voting right is capped at 10 per cent. To acquire a stake of 5 per cent or above, foreign banks have to seek RBI's permission.

Shares of HDFC Bank ended today at Rs 1,143.30, down 2.83 per cent, or Rs 33.50. The Bombay Stock Exchange Sensex fell 1.98 per cent today.