IDBI Bank, United Bank deny merger negotiations as stocks rise
UBI and IDBI Bank shares rose as much as 10.2% and 1.8%, respectively, after the report about the likely merger
Mumbai: IDBI Bank Ltd and Kolkata-based United Bank of India (UBI) on Monday denied a newspaper report that said that the government has proposed the two banks be merged.
“We confirm that so far no proposal for merger of United Bank of India with IDBI Bank has been discussed at IDBI Bank’s board meeting and also no communication from government of India in respect of the above has been received by the Bank. As soon as any communication from the government of India is received by IDBI Bank or any such proposal is discussed at IDBI Bank’s board meeting, necessary disclosure under clause 36 of the Listing Agreement shall be made by the Bank," IDBI said in a notice to BSE.
In a separate statement to BSE, UBI said “as on date, no negotiations are taking place for the merger of the bank with any other bank."
UBI stock rose as much as 10.2% on Monday after the report about the likely merger. However, the stock has shed some of its gains to close 4.80% higher at ₹ 51.35 on BSE on Monday, while the exchange’s benchmark Sensex lost 0.52% to 25,991.23 points.
IDBI Bank shares closed 0.11% higher at ₹ 90.30, after rising as much as 1.83% in intra-day trading on BSE.
On Saturday, the Times of India reported that the union government had asked both IDBI Bank and UBI to “prepare a consolidation plan" for a possible merger, citing unidentified people.
UBI is in trouble after a sharp jump in the bank’s non-performing loans in the quarter ended December 2013. Gross non-performing assets rose above ₹ 8,500 crore touching 10.82% of advances and losses expanded to ₹ 1,238 crore, eroding its net worth.
However, the bank is currently on a recovery path after making cash recoveries of ₹ 645 crore in the quarter ended March which helped the bank cut the bad loans in its portfolio and earn a profit of ₹ 469 crore.
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