LIC ups stake in IDBI Bank to 14% after preferential issue

IDBI Bank has allotted 158 million equity shares, equivalent to 7.16 per cent stake, on preferential basis to Life Insurance Corporation of India (LIC), which now holds over 14 per cent stake in the state-run lender. The allotment of shares is part of IDBI Bank's plan to offload government shareholding as part of its privatisation move.

In the Budget speech, Finance Minister Arun Jaitley said the process of transformation of IDBI Bank had started. "Government will take it forward and also consider the option of reducing its stake" to below 50 per cent, he had said.

IDBI Bank, in a regulatory filing on Monday, said the preferential allotment of 158,761,801 shares, equivalent to 7.16 per cent stake, to LIC happened on March 23. Earlier, LIC held 7.21 per cent stake (137,017,058 shares) in the bank. After acquisition, LIC's stake in IDBI Bank goes up to 14.37 per cent or 295,778,859 shares.

The government at present holds 72 per cent stake in the bank, down from more than 80 per cent earlier.

Meanwhile, a section of IDBI Bank employees on Monday went on a four-day strike to protest the government's move to privatise the bank. They have demanded that the government should give an assurance in writing that the public shareholding in the bank will not go below 51 per cent.

Earlier this month, IDBI Bank chief Kishor Kharat had said international institutions like CDC of England and GIC of Singapore have shown interest in buying stake in the bank.

Besides, there were media reports that the government was in talks with the International Finance Corporation (IFC), a World Bank Group member, to sell up to 15 per cent stake in the struggling infra lender-turned-commercial bank.

In the December quarter, the bank had reported its worst numbers with a net loss of Rs 2,183 crore on a massive rise in non-performing assets, making it the second-largest loss in the nation's banking history after Bank of Baroda's over Rs 3,342 crore in the same period.

Shares of IDBI Bank closed at Rs 68.25 apiece on the BSE on Monday, down 3.60 per cent from its previous level.