State-owned Indian Overseas Bank is set to acquire Bharat Overseas Bank by buying 70 per cent stake held by six other banks for Rs 170 crore (Rs 1.70 billion).
IOB's Board of directors, which met on Tuesday, has approved the proposal of buying BhOB shares held by six other banks at a price of Rs 155 per share.
IOB is the single largest stakeholder with 30 per cent interest in BhOB, a private bank based also in Chennai.
The other shareholders are Bank of Rajasthan (16 per cent), Vysya Bank (14.66 per cent), Federal Bank (10.67 per cent), Karur Vysya Bank and South Indian Bank (10 per cent each) and Karnataka Bank (8 per cent).
In a communiqué to the stock exchanges, IOB said it will approach regulator and other authorities for approval of the acquisition of shares.
Bank of Rajasthan will get the highest amount at about Rs 39 crore (Rs 390 million) for its 16 per cent stake, followed by Vysya Bank (Rs 35 crore -- Rs 350 million), Federal Bank (Rs 26 crore -- Rs 260 million), Karur Vysya Bank and South Indian Bank (24 crore -- Rs 240 million -- each) and Karnataka Bank (Rs 21 crore -- Rs 210 million).
"South Indian Bank has agreed in principle to transfer the 10 per cent stake it holds in BhOB to IOB," a senior South Indian Bank executive said.
BhOB's total business stood at Rs 4,429 crore (Rs 44.29 billion) in 2004-05 with deposits at about Rs 2,749 crore (Rs 27.49 billion) and advances at Rs 1,680 crore (Rs 16.80 billion).
It made a net profit of Rs 20 crore (Rs 200 million) in the last fiscal.
The bank has a network of over 100 branches and the only Indian bank to have a branch in Thailand.
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