HSBC sells UTI Bank's 7.19% stake for Rs 638 cr

HSBC today sold 7.19 per cent stake in UTI Bank for Rs 638 crore, bringing down its holding in the private bank to 4.99 per cent. By doing this, the British bank has adhered to the Reserve Bank of India's (RBI) ownership norms which 'restrict holding of a foreign bank in a private bank to 5 per cent.

HSBC Asia-Pacific (Holdings) sold 19.9 million shares to Fidelity Funds Mauritius, Crown Capital and Master Trust Bank and a few other funds at an average Rs 318.60 a share against acquisition price of Rs 90.

HSBC made a profit of over Rs 460 crore on the deal. In December 2003, HSBC picked up 20 per cent stake in UTI Bank by buying out CDC Capital Partners' holding for Rs 415 crore at Rs 90 a share.

It was planning to make an open offer to raise its stake further but was disallowed by the RBI to do so. Subsequently, HSBC reduced its stake to 14.62 per cent in December 2004 and it got diluted further to 12.2 per cent after UTI Bank went for a GDR issue in February 2005.

Fidelity Funds today bought 5.57 crore shares of UTI Bank at Rs 317.80 a share, Crown Capital 8.87 crore shares for Rs 319.50 a share and Master Trust Bank 2.78 crore shares at Rs 317.80 a share.

The RBI had imposed a few riders on HSBC, following the acquisition of the stake in UTI Bank.

These included barring all HSBC entities from acquiring fresh shares in UTI Bank without RBI's prior permission and constraining HSBC from having any directors on the UTI Bank board.