Lakshmi Vilas Bank shareholders may not get anything from DBS deal

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Lakshmi Vilas Bank shareholders may not get anything from DBS deal

KOLKATA: Equity shareholders in Lakshmi Vilas Bank (LVB) may stand to lose as there may not be anything for them in the scheme of amalgamation with DBS Bank.

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LVB eroded its net worth and therefore it’s natural that shareholders would lose out, two people familiar with the matter said.

Indiabulls Housing Finance, which was denied Reserve Bank of India permission to acquire LVB last year, holds a 4.99% stake in the bank, while Srei Infrastructure Finance holds 3.34% and Capri Group holds 3.82%

The bank’s shares closed Monday at Rs 15.5 on BSE. It had seen a level of Rs 187 in June 2017.

Life Insurance Corporation of India holds 1.6%, Aditya Birla Sun Life Insurance holds 1.83% and Pramerica Life Insurance holds 2.73%, among others.

The promoter holding in the bank is just about 6.8%.

“It’s not looking good for us,” said one of the investors who didn’t want to be named. “Some of the provisions in the scheme of amalgamation need more explanation.”

The Karur, Tamil Nadu-based lender has been under financial strain for the last three years with continuous net losses, mounting bad debt and a steady erosion of capital.

LVB’s capital adequacy ratio turned negative (-2.85%) at the end of September while its tier 1 capital (-4.85%) has been in the negative zone since March.

The old-generation private lender reported a net loss of Rs 397 crore for the September quarter, compared with a Rs 357 crore net loss in the year-ago period while a quarter of its loans are nonperforming.

Gross advances shrank to Rs 16,622 crore at the end of September from Rs 19,251 crore a year back as it had no capital to lend.

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