Dec 10, 2006

ICICI to pay Rs 302 cr to acquire Sangli bank

ICICI Bank, the largest private sector bank in the country, is all set to acquire the capital-starved Sangli Bank. This will be the bank's second acquisition after taking in Bank of Madura in 2000. Boards of the respective banks on Saturday cleared the deck for the proposed merger after a meeting.
After the merger an investor holding 925 shares of Sangli Bank will get 100 shares of ICICI Bank. The amalgamation will result in issuance of around 34 lakh additional shares of ICICI Bank, equivalent to about 0.4% of its existing equity share capital. Considering the share-swap deal, ICICI Bank will pay Rs 302 crore to acquire the Maharashtra-based bank

Sangli Bank has 198 branches — 158 in Maharashtra and 31 in Karnataka. Approximately 50% of its branches are located in rural and semi-urban areas and remaining in metropolitan and urban centres. The bank has approximately 1,850 employees. Its net worth is Rs 25 crore as on March 31, 2006, while its net non-performing assets (NPA) is Rs 20 crore. ICICI Bank is likely to write off the NPA. Sangli Bank's rural branches are its major asset. "This merger will have 0.06% impact of the capital adequacy of the merged entity," said Mulye.

The integration process will be done in-house. We have constituted a committee which has executives from both the banks. This will facilitate the integration process. The shareholders of Sangli Bank may not get any representation on the board of the mergered entity. There will no employee retrenchment and ICICI Bank will continue to operate all the 198 branches acquired from Sangli," said Mulye

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