sitive" rating on IDBI, a public sector bank.
RBI had announced a moratorium on UWB on September 2 and suspended its operations.
The merger proposal of RBI requires IDBI to pay Rs 28 for each UWB share, amounting to a total of Rs 150 crore, and to assume the assets and liabilities of UWB according to the conditions in the proposal. This is the first instance in India where an acquirer bank, IDBI, is required to compensate the shareholders of a bank under moratorium.
The Rs 150 crore purchase consideration will have a negligible impact on IDBI's reported shareholders' funds of Rs 6,659 crore as on March 31, 2006, S&P said.
S&P, however, expects UWB's weaker asset quality to impact IDBI's financial profile negatively. UWB's loan quality and recovery from its Rs 4,000 crore loan portfolio is a concern given its regulatory net NPA ratio of 5.66% as on March 31, 2006, which is significantly above the peer group average of about 2%. S&P will continue to monitor the impact on IDBI's financial profile, the release said.
RBI had announced a moratorium on UWB on September 2 and suspended its operations.
The merger proposal of RBI requires IDBI to pay Rs 28 for each UWB share, amounting to a total of Rs 150 crore, and to assume the assets and liabilities of UWB according to the conditions in the proposal. This is the first instance in India where an acquirer bank, IDBI, is required to compensate the shareholders of a bank under moratorium.
The Rs 150 crore purchase consideration will have a negligible impact on IDBI's reported shareholders' funds of Rs 6,659 crore as on March 31, 2006, S&P said.
S&P, however, expects UWB's weaker asset quality to impact IDBI's financial profile negatively. UWB's loan quality and recovery from its Rs 4,000 crore loan portfolio is a concern given its regulatory net NPA ratio of 5.66% as on March 31, 2006, which is significantly above the peer group average of about 2%.