Mumbai: The Board of India's largest private sector lender ICICI Bank on Saturday approved the merger of The Sangli Bank Limited with itself - a move that would enhance its presence in rural and small and medium enterprises banking space.
The Board of The Sangli Bank also separately approved the all-stock amalgamation with ICICI Bank.
The two banks will on Monday seek Reserve Bank's approval for the merger, ICICI Bank Joint Managing Director Kalpana Morparia said.
She said the merger move was in consonance with its strategy to bolster its rural and SME banking.
While nearly 10 per cent of ICICI Bank's lendings is directed to the rural market, she said the takeover of the 198-branch Sangli Bank based in Maharashtra would give ICICI's rural banking, micro-finance and SME operations a tremendous boost.
ICICI will issue 100 shares for 925 shares of Sangli Bank, which at the current market price of ICICI Bank's shares is valued at Rs 300 crore.
On the basis of the last six-months average price, the value would work out to Rs 230-crore.
"Normally, the latter is taken in the case of mergers," Morparia said.
The transaction would see ICICI Bank issuing an additional 3.45-million shares. It will be around 0.4 per cent of its existing issued equity share capital of 892 million shares.
Deloitte Haskins & Sells, appointed jointly by both the banks, is the independent valuer for the transaction.
None of the Sangli Bank's existing branches would be closed down, Morparia said.
The Sangli Bank is present in seven states and will help ICICI Bank's rural and SME financing a great deal, "especially in Maharashtra and Karnataka," Morparia said, adding that the bank also held licences for seven more branches.
About 1,850 employees will be absorbed into ICICI Bank post-amalgamation.
She also said that there would be no retrenchment of any employee, describing them as "assets, since they have the relevant skill-sets required to tap the rural market."
The Sangli Bank, founded in 1916 in Sangli town, will become an integral part of ICICI Bank and "we have no plans to run it as a SBU," she said.
Asked if ICICI Bank had informally sounded RBI about its move, Morparia said that "no bank will take any major step such as this if it believed that the RBI would find anything objectionable in it."
While the technology platforms of both banks have to be integrated, the fact that 67 branches of The Sangli Bank were fully computerised covering 75 per cent of its business, will also help in the smooth integration of operations.
This is ICICI Bank's fifth acquisition, the others being ITC Classic, Anagram Finance and Bank of Madura (BoM). Besides ICICI Limited got integrated with ICICI Bank Limited.
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