ICICI needs FIPB nod to takeover BoR: Sources

Ahead of the crucial meeting of the ICICI Bank board to approve the takeover of Bank of Rajasthan (BoR) tomorrow, industry ministry sources have said the former would need government clearance for the deal.

"It is obvious that they (ICICI Bank) will have to take the Foreign Investment Promotion Board (FIPB) approval as they are foreign-owned bank," official sources in the industry and commerce ministry said.

ICICI Bank had announced last week that it would take over the troubled Bank of Rajasthan and called a board meeting on Sunday to consider the valuation report and approve the amalgamation of BoR. The ICICI board will also approve the share swap ratio for the merger.

BoR and ICICI Bank had appointed accountancy firm Haribhakti & Co to assess the value of the BoR.
     
Sources further said besides the FIPB, which approves foreign investment, ICICI Bank would also have to obtain regulatory clearances from the Reserve Bank and Securities and Exchange Board.
     
For foreign investment approval, ICICI can directly approach the FIPB or RBI can refer the case to the government.
     
Following the new foreign investment guidelines issues through Press Note 3 in February 2009, ICICI Bank has become a foreign-owned, Indian-controlled bank as the overseas equity in the bank is over 65 per cent.
   
The Bank had earlier indicated a swap ratio of 25:118. It would mean that ICICI Bank will offer 25 shares for every 118 shares of BoR. Post-merger, the Tayal family, which according to Sebi holds 55 per cent equity, would exit BoR.
      
The BoR had 463 branches across the country and amalgamation would push up the number of branches of ICICI Bank of about 2,500. Post-merger, the total business of ICICI Bank will cross Rs 4 lakh crore.
   
Since the announcement of the merger on Tuesday evening, the ICICI shares on three successive trading sessions fell by over 6 per cent to Rs 834.80, while BoR soared by over 73 per cent to its life time high of Rs 144.40 on Friday.
    
The ICICI Bank had last acquired Sangli Bank of Maharashtra.