UWB hopes to retain separate identity under Sicom
The state government is backing Sicom’s bid for UWB. “We want to play a stabilising role...the state government is fully backing us,” said RS Premkumar, chairman, Sicom, in which the state government has 49% and UTI 38%.
By TNN |
MUMBAI: The state government is backing Sicom’s bid for UWB. “We want to play a stabilising role...the state government is fully backing us,” said RS Premkumar, chairman, Sicom, in which the state government has 49% and UTI 38%.
The deal is taking on political hues with Jayantrao Patil, the Maharashtra finance minister having attended the UWB board meeting on Monday. However, RBI may not agree to Sicom’s proposal.
A few months ago, Sicom had approached RBI to increase its stake in the bank and recapitalise it. However, this was rejected then. The only other back with a significant state ownership is J&K Bank. Foreign banks like Citi and StanChart may also be willing to compensate shareholders after a due diligence. Till now, in all weak bank amalgamations, the shareholders have received neither stock nor cash.
Close to 4.5 crore shares of UWB were traded on Monday, and the scrip, after falling to Rs 10, closed at Rs 16.15 on the BSE, down 28.38% from Friday’s close. According to RS Premkumar, chairman, Sicom, the company will try to extract the best value for its shareholders.
As on March 31, ‘06, Sicom had a net profit of Rs 33.9 crore and a networth of Rs 276 crore. The major stakeholders in UWB are Sicom (9.9%), UWB Karmachari Sangh (5%), UWB Officers Organisation (3.15 %), Matternhorn Ventures (1.8%), Parmeshwari Fabrics (1.9%), Sangli Bank (1.27%), LIC (1.5%), SKIL SEZ Infrastructure Holding (1.02%), Rekha Makharia (1.68%) and Niraj Dalmia (1.54%).
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UWB, in a release, said the Maharashtra government through Sicom will help the bank in ensuring the continuation of a separate identity will strengthen it and provide financial support for preparing the scheme of reconstruction. The board has requested Sicom to prepare a reconstruction proposal. Mr Patil, according to bank, said under no circumstances the interest of the depositors will be allowed to suffer in the reconstruction scheme.Bankers said the UWB balance-sheet could have a hole of Rs 300-400 crore. The bank has a gross NPA of Rs 493 crore (13.8%) and a net NPA of Rs 201 crore (6.2%). The bank’s networth as on June 30 is Rs 114 crore. The bank has a negative CAR of 0.3% and has posted losses of Rs 98.6 crore during ’04-05 and Rs 106.5 crore as on ’05-06. However, the bank acquiring UWB can set off losses against the profit.
According to M Venugopalan, chairman and CEO, Federal Bank, “If RBI permits us we are prepared to do a due-diligence. If there is anything left, we will pay the shareholders.” He further said, “This is the only way that private sector banks like us can grow. By ’09, we want to be the acquirers than be acquired.” For foreign banks like Citi and StanChart, UWB will help in ramping up their branch network.
Both the banks have put in their expression of interest and are awaiting a meeting with RBI. UWB has 230 branches and 12 extensions counters, much bigger than StanChart’s 81 branches and Citi’s 39 branches. Shareholders of the bank are likely to receive some compensation as these banks are likely to quote a higher price after the due-diligence. However, the deal would depend on RBI allowing foreign banks to pick up the branch network of UWB.
ICICI Bank, which has 581 branches, has not got any fresh branch licence in the last one year, after it was penalised in the IPO scam. Even StanChart and Citi have not recieved any fresh licences for last one year.
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