Ministry Eases Listing Norms For Bob

holding of equity will be less than 25 per cent.

The Bombay Stock Exchange and the Vadodora Stock Exchange had sought the permission of the ministry for listing the BoB shares and was given an okay recently. For equity shares to be listed minimum public holding has to be 25 per cent. However, BoB which is going public will have a post-issue public holding of just 19 per cent. The stock exchanges had sought the relaxations on the request from BoB, under Section 19 (2B) of the Securities Contract (Regulation) rules.

This section allows corporates an exemption from the 25 per cent public holding. In fact, even the State Bank of India had taken advantage of this section as its public holding at present is 14.9 per cent. The other block is held by institutions.

 

In the case of Bank of Baroda, total non-government holding will be 34 per cent. Of this only half will be offered to the general public while the balance will be held by institutions placed though firm allotments. BoB is offering 200 shares to each of its employees.

The Bank of Baroda has already moved the Securities and Exchange Board of India with its plan to tap the capital market.

The offer document, submitted to Sebi early this week, indicated a premium of Rs 75-90 and a dilution of the government holding to 66 per cent from the current level of 100 per cent. ICICI Securities & Finance Company, the Industrial Development Bank of India and SBI Caps will lead manage the Rs 850-1000 crore BoB issue.

BoB is one of the three nationalised banks which have been allowed to return a part of the government capital. The other two banks are the Canara Bank and the Corporation Bank. After returning Rs 380 crore to the government, BoB's equity base will be trimmed down to below Rs 200 crore.

It has already slashed its equity base from Rs 740 crore to Rs 577 crore by shifting the World Bank contribution from its equity to the tier two capital.

The idea is to dilute the government stake to the extent of 66 per cent. Once the shares are listed, the government can go for further divestment of its stake as the government share can come down up to 51 per cent, a BoB source said.

The first nationalised bank to go public was the Oriental Bank of Commerce. The State Bank of India also diluted the RBI stake by tapping the market in 1994. BoB, Canara and the Corporation Bank along with the Bank of India and the Dena Bank constitute the second lot of nationalised banks to tap the capital market.