ICICI Bank to cut stake in ICICI Pru Life by 2% to 52%

MUMBAI: ICICI Bank will reduce its stake in ICICI Prudential Life Insurance by 2 per cent to 52.89 per cent as it seeks to raise money to overcome a likely jump in provisions in the quarter ended June 2018.

In a notice to the stock exchanges the bank said ICICI Bank’s board of directors had approved the sale of up to 2.87 crore equity shares representing up to 2 per cent of the paid-up equity share capital of ICICI Prudential Life Insurance.

The sale will be “in one or more tranches or in any manner permissible under applicable law, including through an ‘offer for sale by promoters through stock exchange mechanism’ (‘OFS’), as may be permitted and in the manner specified by the Indian regulatory authorities,” the bank said in a filing to the BSE.


ICICI Bank has been under pressure due to rising NPAs especially from the sectors linked to infrastructure. In the quarter ended March the bank reported a 50 per cent drop in net profit due to a sharp rise in provisions. Provisions jumped more than two times to Rs 6,625.75 crore from Rs 2,898.22 crore in the same quarter last year mainly because the RBI forced lenders to adopt a more stringent NPA recognition policy.

“ICICI needs the money for its provisions. It’s provision coverage ratio at 48 per cent excluding technical write offs is lower than the average 56 per cent for corporate focussed banks. This money will help the bank improve provisions in the quarter ended June 2018,” said Asutosh Mishra, senior analyst at Reliance Securities.

It is unclear whether the bank will initiate the sale before the end of the month. Based on ICICI Prudential Life’s market capitalisation of Rs 58,893.35 crore at close of trading on Wednesday, a sale of 2 per cent stake in the company will fetch ICICI Bank Rs 1,178 crore.