Friday, April 22, 2011

Central bank rider to Enam-Axis deal

RBI objects to Bhansali’s induction to the bank’s board

The Reserve Bank of India (RBI) has approved, in principle, Axis Bank’s acquisition of select businesses of Enam Securities, but objected to the induction of Vallabh Bhansali, co-founder and chairman of the broking company, on the bank’s board.

Bhansali’s induction on the bank’s board as an independent director was a part of the deal.

“Other terms of the RBI’s in-principle approval include the stipulation that no shareholder of Enam Securities acquiring shares of Axis Bank under the scheme of arrangement would be eligible for being a director on the board of the bank,” the bank said in a statement.

Axis Bank’s Executive Director and Chief Financial Officer, Somnath Sengupta, said the bank had not decided if Bhansali would be included in the bank in any other role.

“The bank is in the process of examining the implications of the conditions laid down by the RBI, and is reviewing the scheme of arrangement in order to proceed with the completion of the transaction,” he said.

The central bank also asked Axis to revise the scheme of accounting and the eventual structure of the business proposed to be acquired.

Sengupta said the acquisition was expected to be completed in a couple of months. He dismissed reports that the RBI had raised objections on the valuation of the deal.

In November, Axis Bank had said it would merge the equities and investment banking businesses of Enam Securities. The deal size is estimated to be Rs 2,067 crore. Shareholders of Enam are to get 5.7 shares of Axis Bank for every share held in the broking company.


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