The Netherlands-based ING Group today announced that it has successfully closed the purchase of an additional 23.99 per cent stake in Vysya Bank worth Rs 340.8 crore.
A statement from ING said its stake in Vysya, bought through its wholly owned subsidiary, BBL has gone up to 43.99 per cent representing the largest foreign direct investment by an international financial institution into an Indian bank and the first investment in India under the newly increased 49 per cent cap on foreign direct investment in Indian banks.
ING said that the board strength in the bank has also been increased to 15 with the addition of two executives. They are Peter Smyth, general manager for ING Asia Pacific with responsibility for India, Australia and Malaysia and Jacques Kemp, general manager for ING Asia-Pacific with responsibility for South Korea, Indonesia and Thailand.
After the purchase of additional stake, ING's equity has gone up to 43.99 per cent, while that of the GMR group and the Washington-based International Finance Corporation is around 5 per cent apiece.
An official spokesman of the bank said the integration of the operations will commence now though he refused to state whether the bank's treasury operations will be shifted to Mumbai as most of the other banks have done.
There are indications that ING may effect changes in the top management of the bank and change the name of the bank itself to ING Vysya Bank.
"The acquisition of a larger shareholding in Vysya Bank demonstrates ING's commitment to Vysya Bank, and our intention to develop a robust bancassurance strategy in India," ING Asia-Pacific general manager Peter Smyth said in a statement.
Vysya Bank posted a 78 per cent increase in net profit to Rs 68.75 crore for 2001-02 while its total business increased 7 per cent to over Rs 16,000 crore.
Return on assets, which is a measure of profitability, improved to 0.73 per cent from 0.42 per cent. Similarly, return on equity rose to 10.18 per cent from 5.98 per cent during the previous year.
The deposits of the bank stood at Rs 8,068 crore, advances were Rs 4,418 crore and investments were Rs 3,597 crore. The bank mopped up Rs 159 crore out of treasury operations.
The bank plans to increase the deposits to Rs 10,085 crore and increase the advances to Rs 5,147 crore during the current year.
Bank's net NPA as a percentage of net advances was at 4.59 per cent while the capital adequacy ratio was 11.57 per cent and the net worth of the bank stood at Rs 686.34 crore.
Insurance JV to up capital base
ING Vysya Life Insurance Company has reached an agreement with its shareholders to increase its capital base by Rs 30 crore to Rs 140 crore, which is expected to lead to increase in the shareholding of GMR which is currently at around 25 per cent.
In a statement, ING said the proceeds of the capital will be used to fund further business development as part of the national expansion of ING Vysya Life Insurance in India. "Subsequent to the capital call, ING Vysya Life is in the process of adjusting its equity shareholding structure," the statement said.
Vysya Bank, which has 49 per cent stake in the company has already stated that it plans to decrease its stake in the company to around 20 per cent.
With Insurance Regulatory Authority of India capping foreign shareholder's investment to 26 per cent, the third partner in the joint venture, GMR will have the choice of buying the stake shed by Vysya Bank. In the joint venture, ING holds 26 per cent, Vysya Bank 49 per cent and GMR Group holds 25 per cent.
