IOB board will decide on BhOB takeover

Chennai-Indian Overseas Bank will hold its board meeting on February 14 to consider a proposal to take over Bharat Overseas Bank by buying out six of its shareholders.

IOB holds 30 per cent stake in the private sector bank. 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 (10 per cent), South Indian Bank (10 per cent), and Karnataka Bank (8.67 per cent).

The meeting of board of directors would consider purchase of shares held by other shareholders, the bank informed Bombay Stock Exchange today.

RBI norms require commercial banks to have an equity base of Rs 300 crore. Besides, they must have a diversified holding, with no single entity owning more than a 5 per cent stake.

Bharat Overseas Bank has an equity base of Rs 15.75 crore. Bharat Overseas Bank was originally designed to anchor Indian banks' overseas operations.

The provocation was the Thai government asking the Indian Overseas Bank to close its Bangkok branch in 1969 after its nationalisation. The government withstood the Thai pressure for four years and in 1973, following an RBI initiative, six private banks teamed up with Indian Overseas Bank to form Bharat Overseas Bank.