Dubai’s Emirates NBD to Acquire 60% Stake in RBL Bank for Rs 26,853 Crore
RBL Bank Ltd. has approved raising up to Rs 26,853 crore via a primary stake sale to Dubai’s state-owned lender Emirates NBD Bank, according to a regulatory filing on Saturday. This move is expected to have a significant impact on the Indian banking sector, with banking sector news and Indian stock market updates being closely watched by investors.
Deal Details
RBL Bank will sell 95.9 crore shares to Emirates NBD at Rs 280 each, which marks nearly a 7% discount to the stock’s previous closing price. The fund infusion will result in a stake acquisition equivalent to 60% of the post preferential equity share capital of the bank. The India branch of Emirates NBD will be merged with RBL Bank following the fundraise.
NDTV Profit had reported on Oct. 13 that Emirates was set to buy a controlling stake in the Mumbai-based private bank for approximately $3 billion. This deal is pending regulatory approvals from the Reserve Bank of India, the Department for Promotion of Industry and Internal Trade, the Cabinet Committee on Economic Affairs, and the Competition Commission of India.
Impact on RBL Bank’s Management
Emirates NBD is unlikely to change the management at RBL Bank, people aware of the matter told NDTV Profit on the condition of anonymity. A majority of management members are expected to continue in their roles, and RBL Bank will continue to take strategic calls with inputs from the new owner post the transaction. Emirates NBD will have board representation following the fund infusion.
RBL Bank’s History and Performance
RBL Bank, formerly known as The Ratnakar Bank Ltd, is a private sector lender established in 1943. Originally established as a regional bank in Maharashtra, RBL Bank became a private sector lender in 1970. It, however, remained a closely owned small lender, largely limited to Maharashtra.
In 2010, Bank of America ex-banker Vishwavir Ahuja took over as MD and CEO. In 2014, Ahuja renamed the lender to RBL Bank to make it a national private bank. In December 2021, Ahuja stepped down suddenly, before his tenure ended. The regulator appointed a director on the board to monitor the transition at the lender.
While his deputy Rajeev Ahuja continued to run the bank as interim MD and CEO for a few months after, RBI later appointed K Subramaniakumar as the leader in June 2022.
Financial Performance
The firm, on Saturday, also reported a 4% year-on-year decline in net interest income, which came down to Rs 1,551 crore in the September quarter from Rs 1,615 crore in the same period the previous fiscal. The bank also reported a 20% decline in net profit, which fell to Rs 178 crore from the previous year’s Rs 222 crore.
Profit down 20% to Rs 178 crore versus Rs 222 crore (YoY).
Net interest income down 4% to Rs 1,551 crore from Rs 1,615 crore (YoY).
Gross NPA ratio down 46 basis points to 2.32% vs 2.78% (QoQ).
Net NPA ratio up 12 basis points to 0.57% versus 0.45% (QoQ).
What This Means for Investors
This deal is significant for investors, as it marks a major investment in the Indian banking sector. Investors can expect stock market news and updates to be impacted by this development. To stay ahead, investors should keep an eye on Nifty and Sensex news, as well as banking sector trends.
