Ing Plans Pref Issue To Up Vysya Bank Pie

The Belgium-based ING group is looking at further increasing its holding in Vysya Bank to 49 per cent through a preferential issue. The ING group had recently decided to buy out GMR Group's 23.99 per cent in the bank, thus enhancing its stake from 20 per cent to 43.99 per cent.

It had then indicated its intentions to further up its holding to the permitted 49 per cent cap for foreign banks in a domestic private bank.

ING has since been looking at various options including partly buying out International Finance Corporation's (IFC) 10 per cent holding, taking over GMR Group's balance 5 per cent, as well as adopting the creeping acquisition route.

The bank board, however, favours a preferential issue as this will inject additional capital into the bank, and shore up the bank's capital adequacy ratio, currently at 11.57 per cent for fiscal 2002.

The private bank more than meets the stipulated 9 per cent capital adequacy ratio as laid down by the regulator. However, as the ING group has plans to expand the bank's retail operations, it will require additional funds at a later date, stated senior ING officials.

Its capital adequacy ratio has already dipped from last year's (2000-01) figure of 12.05 per cent. The preferential issue is expected to materialise before the year end. This is partially on account of writing off bad loans to the extent of Rs 90 crore during 2001-02, bringing down the gross non-performing assets to 4.6 per cent from 10.3 per cent in the preceding fiscal.

Sources familiar with the proposed issue said the premium could range between Rs 300 and 600 a share. ING is acquiring GMR Group's holding at Rs 626.92 a share, which is at a substantial premium from the scrip's current share price on the Bombay Stock Exchange.

It had in November 2000 through its subsidiary Bank Brussels Lambert (BBL), increased its holding from 9 per cent to 20 per cent at Rs 150 a share.