Swap ratio for ICICI-BoR merger should be minimum 1:3: Tayal

Ahead of tomorrow's Board meetings of ICICI Bank and Bank of Rajasthan to decide the share-swap ratio for the merger of the two entities, BoR's promoter, P K Tayal, today pitched for a better valuation than that presently offered by ICICI for his stake in BoR.

"They (ICICI Bank) have got a lottery. I believe that it is a (good) deal for them...We are definitely looking for a better valuation... It should be a minimum 1:3," Tayal said over phone here. Early this week, the Boards of both banks in-principle approved their merger and jointly appointed accounting firm Haribhakti & Co to arrive at the valuation.

 

ICICI Bank offered 25 shares for every 118 shares of BoR (or a swap ratio of 1:4.72) held by the Tayal family. Under the share-swap ratio, the Tayal group will receive 1.88-crore ICICI Bank shares for their 8.88-crore BoR shares.

According to a senior BoR official, the bank's Board is likely to argue for a better valuation in tomorrow's meeting and also discuss issues pertaining to safeguarding the interests of its 30-lakh customers and nearly 4,000 employees.

"Improving the valuation from what has been offered by the bank will definitely come up in the Board meeting tomorrow. Also, the Board is keen that the interests of its customers and staff are protected," the official said on strict condition of anonymity.

Tayal has a stated holding of just above 28 per cent in the bank but according to market regulator Sebi, his actual holding is around 55 per cent. Recently, the market regulator had banned around 100 entities including Tayal group firms from accessing the stock market, accusing the promoters for fraudulently hiking their holding in the bank.

Banking regulator, the Reserve Bank also penalised the bank with a Rs 25-lakh fine for alleged violation of various norms including misrepresentation of documents, KYC norms and handling of a particular corporate account. The regulator also appointed Deloitte Haskins and Sells to conduct a special audit of the bank.

According to banking sources, Deloitte has not found any major irregularities in the bank's accounts in its interim report submitted to the Reserve Bank recently. BoR has a total business of over Rs 23,000-crore, as against nearly Rs 3,84,000-crore of ICICI Bank.

BoR's turnover was Rs 1,507-crore in 2008-09, while that of ICICI Bank in 2009-10 was over Rs 33,000-crore.

BoR has a network of 463 branches, while ICICI Bank has a little over 2,000. ICICI Bank's last acquisition was Maharashtra-based Sangli Bank in 2007. The last major acquisition in the country's private sector banking space was in 2008, when HDFC Bank acquired Centurion Bank of Punjab.