Life Insurance Corporation (LIC) has increased its stake in Chennai based Indian Overseas Bank (IOB) from 9.96% to close to 12%.
LIC has done so by buying additional shares of the bank from open market in different trenches. The Insurance Regulatory and Development Authority (IRDA) had put a ceiling on the exposure that LIC could take on a single company. IRDA had said that LIC cannot take exposure in a single company by more than 10%. The norm has not yet been relaxed by the insurance regulator although LIC has sought for a review of the same.
The life insurer has bought around 2% stake through market purchase. The stake of LIC in IOB thus rose to 11.97% from 9.96%. The company has bought 1, 08, 41,158 shares and the transaction was executed on BSE and NSE platforms.
As a regulatory filing with both the exchanges, IOB has reported that LIC now holds 6, 52, 02,526 shares (11.97%) in IOB. Prior to transaction LIC was holding 5, 42,61, 368 shares in the bank.
The Government holding in the bank is 61.23% while Citigroup Global Markets Mauritius Pvt Ltd has 1.59% equity shares, apart from LIC. The total public shareholding in the bank has been at 38.77%.
IOB had taken over Pune-based Shree Suvarna Sahakari Bank in 2009. it had acquired Mumbai-based Adarsha Janata Sahakari Bank in 2001. The December 2009 quarter results showed a 73.7% drop in the net profit of the bank which stood at Rs 101.70 crore as compared to Rs 388.44 crore in the same quarter last fiscal.
LIC has been harboring plans to enter into the banking sector (8th March 2010). The quarter ended December 2009 has shown that LIC has been holding stakes in key public sector banks such as Canara Bank (5.87%), Bank of India (7.65), SBI (10.53,) Corporation Bank (26.32) PNB (9.15), Bank of Baroda (7.94), Oriental Bank of Commerce (13.58), Syndicate Bank (10.35), Allahabad Bank (10.94), Dena Bank (5.77 )and Andhra Bank (9.86). Among the private sector banks, LIC had equity shares in HDFC Bank (7.02), ICICI Bank (10.35) and Federal Bank (4.39%), among others.