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Current Affairs 8 April 2019 Digest 2: Merger of Lakshmi Vilas Bank with Indiabulls Housing; Army Commanders' Conference 2019

Private sector lender Lakshmi Vilas Bank Ltd on April 5, 2019 announced its merger with mortgage financier, Indiabulls Housing Finance Ltd in an all stock deal. The merged entity will be named as ‘Indiabulls Lakshmi Vilas Bank’ and will be among the top eight private banks in India by size.

Apr 8, 2019 12:46 IST
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Story 1: Lakshmi Vilas Bank announces merger with Indiabulls Housing Finance

The Board of private sector lender, Lakshmi Vilas Bank Ltd (LVB) on April 5, 2019 approved its merger with the mortgage financier, Indiabulls Housing Finance Ltd in an all stock deal.

As per the ‘Scheme of Amalgamation’ approved by the LVB board, for every 100 shares of Laxmi Vilas Bank held, shareholders will receive 14 shares of Indiabulls Housing Finance.

The merger now awaits the approval of the Reserve Bank of India.

Note

This is not the first time that the Lakshmi Vilas Bank has announced its merger. Earlier in 2014, the bank proposed its merger with the Indiabulls Housing Finance; however it was rejected by the RBI.

Highlights of the merged entity

The merged entity will be named as ‘Indiabulls Lakshmi Vilas Bank’ and will be among the top eight private banks in India by size.

The shareholders of Indiabulls will own 90.5 percent of the amalgamated entity while those of Lakshmi Vilas Bank will hold the balance 9.5 percent.

The stake of Indiabulls Founder and Chairman Sameer Gehlaut will come down from 21.5 percent to 19.5 percent and to below 15 percent before the merger is effective. Gehlaut is likely to take over as the Vice-Chairman of the amalgamated entity.

Indiabulls’s Vice-Chairman and Managing Director Gagan Banga and LVB’s Managing Director Parthasarathi Mukherjee will be Joint Managing Directors.

Indiabulls’s board constituted a reorganisation committee headed by Independent Director and former RBI Deputy Governor SS Mundra as a step towards the proposed merger.

Figures of merged entity

Share Swap Ratio

0.14:1

Net Worth

Rs 19,472 crore

Loan Book

Rs 123,393 crore

Employee Strength

Over 14,300

Deposits

Rs 30,787 crore

What does the merger hold for Lakshmi Vilas Bank & Indiabulls?

The merger will give a pan-India presence to the LVB and Indiabulls get access to low-cost stable funds and an entry into banking. Indiabulls Housing Finance, India’s second largest housing finance firm, had applied for a banking licence in 2013 but it turned out to be futile.

The merger is expected to create a high capital base for strong growth, and a huge opportunity for both the entities to venture into newer businesses.

Other mergers in similar segment

It is not the first time that a Bank has announced its merger with a financier. There have been a few mergers on the similar lines lately including the merger of GRUH Finance with Bandhan Bank, Capital First with IDFC Bank and Bharat Financial Inclusion with IndusInd Bank.

Bandhan Bank’s acquisition of Gruh Finance: Bandhan Bank on March 14, 2019 received no objection from the Reserve Bank of India (RBI) for the proposed acquisition of Gruh Finance, the affordable housing finance arm of HDFC Ltd.

Merger of Capital First with IDFC Bank: IDFC Bank and non-banking financial company (NBFC), Capital First in December 2018 announced completion of their merger. The merged entity was named as 'IDFC First Bank Ltd'.

Merger of Bharat Financial Inclusion with IndusInd Bank: IndusInd Bank Ltd in October 2017 signed a deal to merge with Bharat Financial Inclusion Ltd through a composite scheme of arrangement. The merger received approval from the Competition Commission of India on December 19, 2017. IndusInd Bank received a ‘No Objection’ from the Reserve Bank of India for the merger on March 13, 2018.

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Story2: Army Commanders' Conference 2019 begins

The biannual Army Commanders’ Conference 2019 began on April 8, 2019 in New Delhi. The opening address was delivered by the Defence Minister, Nirmala Sitharaman.

The conference will go on till April 14, 2019 and will be chaired by General Bipin Rawat, Chief of the Army Staff.

Highlights of the Army Commanders' Conference 2019

The senior commanders will deliberate upon specific issues pertaining to Army formations and Army as a whole.

The conference will witness discussions over a few important issues including management of the extant security dynamics, mitigation of future security threats and enhancement of combat over potential opponents.

It will also deliberate on issues like infrastructure development for capacity enhancement along the Northern borders, review of strategic railway lines, issues related to Border Road Organization projects, and operations, administration and welfare of troops.

About Army Commanders’ Conference

‘The Army Commanders’ Conference is held biannually for formulating important policy decisions through collegiate deliberations.

It is an important event for planning and execution process of the Indian Army.

The conference is chaired by the Chief of the Army Staff.

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