Maharashtra pitches for United Western revival

The United Western Bank drama took a curious turn today, with the Maharashtra government deciding that Sicom (State Industrial Investment Corporation of Maharashtra) would play a pivotal role in preparing for it a reconstruction scheme.

Sicom, a principal shareholder in United Western Bank, is expected to bring in Rs 300 crore of capital to meet the prudential norms prescribed by the Reserve Bank of India (RBI).

The state government's move, which came at the initiative of the bank's board, was aimed at avoiding its takeover, sources close to the development said.

The board's decision to seek help from the state government was announced on a day when three more banks "" Standard Chartered, Andhra Bank, and Allahabad Bank "" joined the list of suitors, deciding to submit expressions of interest.

With this, the number of suitors for United Western Bank has gone up to six. ICICI Bank, Canara Bank, and Federal Bank have already announced their interest in this regard.

Maharashtra Finance Minister Jayant Patil, who attended the bank's emergency meeting today, also pledged support to the bank in ensuring "the continuation of its independent identity."

The bank's board, which discussed issues arising out of the moratorium order recently passed by the RBI, later issued a press note expressing gratitude to the state finance minister for his support.

The Sicom board will meet tomorrow to consider the reconstruction proposal, alongwith the issue of capital infusion.

On the issue of a commercial entity being allowed to hold a stake beyond the 10 per cent ceiling, a former banker said United Western Bank was a financially weak bank under the RBI's financial parameters, and the norms would be exempted for the entity that came forward for its turnaround.

Meanwhile, the bank's scrip today eroded by 28.38 per cent to Rs 16.15 on the Bombay Stock Exchange, against the previous day's close of Rs 22.55. The bank's scrip reached an intra-day high of Rs 18.05.

The ICICI Bank's board, which met today, believes that United Western Bank's network of over 240 branches and extension counters can be leveraged to grow its rural and small and medium enterprise banking operations in particular, and its overall distribution franchise in general.

Canara Bank is of the view that a number of positive synergies exist between the two banks, especially in terms of the network of branches, geographical contiguity, the bank's excellent track record, and United Western Bank's need for a strong, effective and professional management.