Bank of Rajasthan has been having a tough time because of the series of probes being carried out by RBI. The bank had fouled in many cases which led to the series of probes.
Bank of Rajasthan has been one of the oldest private banks of the country. The bank started coming into controversies from 1990s.
Following the continuous series of controverises, the Tayals who are the owners of the bank have decided to merge it with the second largest lender of the country, ICICI Bank.
The Tayals had been searching for a suitable match for the merger since quite some time. The boards of both banks have given an in- principle consent to the merger.
With this merger, ICICI Bank would be making the third acquisition in the last decade. It has already started a due diligence process on Bank of Rajasthan.
ICICI Bank MD & CEO Chanda Kochhar said, "We have reached an indicative pricing with the promoters on a swap ratio of 25:118. (A BoR shareholder will receive 25 ICICI shares for every 118 BoR shares held.) This is, however, subject to due diligence. Our understanding of the strategic value is that it would have taken us three years to build the current account and savings account relationships. Also, the deal prices the market capitalisation per branch in the range of around Rs 6.5 crore, which is similar to other old private sector banks."
BoR MD & CEO G Padmanabhan quoted that, "It was a brief board meeting. An in-principle approval has been taken to amalgamate the bank with ICICI Bank. The majority shareholder is looking at swapping his official shareholding of 28.60% with ICICI Bank shares. Other details on valuation and share swap will be decided on May 24."