ICICI Bank approves transfer of stake in companies to new subsidiary

ICICI Bank Ltd has announced that the Board of Directors of the Bank had, subject to the receipt of all regulatory approvals, approved the transfer of Bank's equity shareholding in ICICI Prudential Life Insurance Company Ltd, ICICI Lombard General Insurance Company Ltd, ICICI Prudential Asset Management Company Ltd and ICICI Prudential Trust Ltd to a proposed new subsidiary. The Bank had received definitive offers from investors for subscription to equity shares of the proposed new subsidiary and for entering into definitive agreements for this purpose.

The arrangement is subject to receipt of regulatory and other approvals including that of the Reserve Bank of India, the Insurance Regulatory and Development Authority and the Foreign Investment Promotion Board, and would terminate failing receipt of such approvals within a mutually agreed date. While the Bank has not received any official communication from the Foreign Investment Promotion Board in respect of its application, the Bank has been given to understand that its application has not been approved by the Foreign Investment Promotion Board at its meeting on June 22, 2007.

The Bank will, in consultation with its advisors, evaluate the further steps to be taken to obtain the requisite approvals in this regard. There can be no assurance that such approvals will be obtained or that the proposed subsidiary will be successful in raising capital, or of the valuations based on which such capital will be raised.

The Bank's inability to implement this reorganization and raise capital in this subsidiary, or the valuation at which such capital is raised, could adversely impact its ability to capitalise its insurance subsidiaries, their growth, its future capital adequacy, its financial performance and the price of its equity shares and American Depositary Shares.

Source : Equity Bulls

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