HSBC gets FIPB nod on UTI Bank stake

HSBC has received approval from the Foreign Investment Promotion Board (FIPB) for its investment in UTI Bank.

Speaking to Business Standard HSBC chief executive officer Niall Booker said: "We have received FIPB approval and there is no indication that the Reserve Bank of India (RBI) will not permit us to acquire the stake. We are optimistic."

Booker was however, not too happy over the judgement passed by the Securities and Exchange Board of India (Sebi), which had last week informed the foreign bank that it would not need to make any open offer despite its acquisition in the private sector bank exceeding 15 per cent.

HSBC had late last year acquired CDC Capital Partners' 20.08 per cent stake in UTI Bank.

As voting rights for foreign bank have been capped at 10 per cent despite higher shareholding, the capital market watch-dog wrote to HSBC that there was no need for it to make an open offer.

"The actual wording of the regulation refers to the shareholding and not voting rights or the ability to vote. This leaves room for ambiguity in interpretation, and our lawyers feel this is a grey area," said Booker. He would have preferred Sebi to have offered greater clarity.

Asked what is the finer print in terms of any future change in the voting rights issue pertaining to foreign banks, Booker said: "Sebi is firm that our acquisition will not trigger an open offer and we feel this is binding going forward."