Stock Holding Corporation of India (SHCIL) merged with IDBI Bank
October 31, 2012: The Board of Directors of IDBI Bank Ltd has approved, in-principle, a proposal to merge Stock Holding Corporation of India Ltd (SHCIL) with IDBI Bank subject to statutory/regulatory and shareholder’s approvals as may be required in this regard.
The merger of SHCIL with IDBI Bank will be consummated through a non cash Share Swap deal. Leading Merchant Bankers / Chartered Accountants / Valuers are being appointed for undertaking due diligence and valuation of SHCIL for arriving at the Swap Ratio for the merger. As soon as the Swap Ratio is arrived at, a Scheme of Amalgamation would be prepared and the process of obtaining requisite approvals from statutory / regulatory authorities would be set in motion. The entire process of merger is expected to be completed by March 31, 2013.
The merger of SHCIL would build capabilities within the Bank for HNI Custody & asset servicing and giving a push for IDBI Bank’s retail banking operations. IDBI Bank would be in a position to enhance its presence in third party distribution of financial products and gain entry into custody services. The Bank can accordingly tap the potential from foreign banks/FIIs for custodial business in view of lower cost model and comfort in dealing with IDBI Bank. SHCIL currently provides e-stamping business in ten states, which has synergistic fit with IDBI Bank’s franking business. SHCIL’s Document Management & Broking Subsidiaries could be leveraged for generating substantial business & returns. The activity of insurance repository service shall help IDBI Federal Life Insurance Company Ltd.
According to IDBI Bank, all the activities presently undertaken by SHCIL are permitted banking activities & hence, integration would be easier. Considering that SHCIL is essentially a company offering financial services, IDBI Bank’s capital adequacy would not get adversely affected.
SHCIL was established in 1986 and was promoted by IDBI, along with six other public financial & investment institutions of the country. The company provides custodial services for financial intermediaries (mutual funds, FIIs), depository services (for retail investors), e-stamping, distribution of FDs and bonds, mutual fund products, GOI Bonds and loan products, PF fund accounting, SGL constituent account services, etc. to institutional investors, banks, mutual funds and retail investors. While document management services and insurance repository services are provided through their subsidiary, viz., SHCIL Projects Ltd., broking services and equity derivatives clearing services are provided through another subsidiary, viz., SHCIL Services Ltd. The company provides e-stamping services in ten states, viz., Assam, Delhi, Gujarat, Himachal Pradesh, Karnataka, Maharashtra, Puducherry, Rajasthan, Tamil Nadu and Uttarakhand. The company operates through a wide network of 227 branches / offices with around 1300 employees.
IDBI Bank is the youngest new generation public sector bank that with 998 branches and 1592 ATMs. The Bank had an aggregate balance sheet size of Rs. 2,63,535 crore and total business of Rs 3,46,457 crore as on September 30, 2012.
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