Lic To Step Up Stakes In Corporation Bank, Obc

The Life Insurance Corporation of India (LIC) plans to increase its holdings in Corporation Bank and Oriental Bank of Commerce (OBC) as well as get a toe-hold in ICICI Bank through off-market deals with the Unit Trust of India.

LIC has agreed to buy 43.88 lakh shares of OBC. This will enable LIC to get an additional 2.28 per cent stake in OBC by paying around Rs 15.56 crore. With this, its stake in the Delhi-based public sector bank will cross 11 per cent. The corporation recently increased its stake in the bank to 9 per cent through open market purchases. The OBC scrip is currently traded at around Rs 35 on the bourses.

 

LIC officials had been claiming that the deal was only an investment opportunity as OBC was one of the better-run banks and the current price was much below the initial public offer price.

However, the banking industry perceives the step-up as part of LIC's strategy to become a financial sector power house.

LIC also plans to get an additional 1.23 per cent stake in Corporation Bank by buying 14.75 lakh shares for around Rs 20.74 crore. This will push up LIC's stake to over 28 per cent. LIC had earlier picked up a 12.32 per cent stake in the bank.

Subsequently, the bank had given a preferential allotment of 2.4 crore equity shares of Rs 10 each at a premium of Rs 186 per share to LIC, thus increasing the latter's stake to 27 per cent. The Corporation Bank scrip is trading at around Rs 141 now.

The government holding in Corporation Bank has fallen to 56.94 per cent from 68.33 per cent.

The 10 lakh shares of ICICI Bank, which LIC proposes to pick up from UTI, will increase LIC's stake to around 1.70 per cent. Its existing stake in the bank is around 1.25 per cent.

LIC will also increase its stake in State Bank of India by 0.15 per cent through the acquisition of 8 lakh shares.