Lakshmi Vilas Bank (LVB) and Indiabulls Housing Finance (IBHF) boards on Friday April 05,2019 approved merger of the two entities.
The
merger would solve LVB’s capital needs as its capital adequacy ratio
will go up to 20.6%, post the merger, due to the mortgage lender’s
strong capital position.
IBHF, which has a loan book three times bigger than LVB, and was unsuccessful in getting a bank licence earlier, will now get access to the low-cost funds of the bank.
LVB’s growth ambitions were choked due to capital needs, with its capital adequacy ratio falling to 7.7% as on end December, much below the regulatory requirement of 10.875%. IBHF’s capital adequacy ratio is 23.1%.
IBHF’s shareholders will own 90.5% of the amalgamated entity, while LVB shareholders will hold the remaining 9.5%.
IBHF, which has a loan book three times bigger than LVB, and was unsuccessful in getting a bank licence earlier, will now get access to the low-cost funds of the bank.
LVB’s growth ambitions were choked due to capital needs, with its capital adequacy ratio falling to 7.7% as on end December, much below the regulatory requirement of 10.875%. IBHF’s capital adequacy ratio is 23.1%.
IBHF’s shareholders will own 90.5% of the amalgamated entity, while LVB shareholders will hold the remaining 9.5%.
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