IDBI Bank in talks to buy a private bank

IDBI Bank in talks to buy a private bank

Mumbai: State-run IDBI Bank Ltd is in talks with a private-sector bank for a merger, chairman and managing director Yogesh Agarwal said on Tuesday.

“It is a private sector bank. I am not looking at public sector space at all," he said on the sidelines of a banking summit in Mumbai.

“Talks are on. Due diligence has been done. I cannot commit on the time-frame," he added.

He also said the bank’s credit is picking up, with good growth in retail and housing segment and it is confident of achieving the 20% loan growth target for FY10.

The bank also does not plan to merge its home loan finance arm with itself or offload stake in it, Agarwal said.

“There is no real advantage on merging it and it takes time also..We have no plans to restart process of offloading stake in it," he said.

IDBI Home Finance is a wholly-owned subsidiary of the state-run bank and it was earlier planning to sell stake to Dewan Housing Finance Corp Ltd.

However, the governmet had opposed the move. The bank also planned to raise capital and said it was considering a rights issue of shares or a follow-on public offer.

“It can be either rights issue or FPO (follow-on public offer) but mostly it will a rights issue. We are waiting for government approval," Agarwal said.

The bank had earlier said it planned to raise around Rs20 billion rupees through a rights issue of shares. After the rights issue the government’s stake would be maintained at 52%, he said.

At 1.04 p.m., shares of the bank were up 1.04% at Rs135.65 in a choppy Mumbai market.