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HSBC acquires 14.71 p.c. stake in UTI Bank

By Our Special Correspondent

MUMBAI DEC. 2. The HSBC Asia Pacific Holdings (U.K.) Limited, a wholly-owned subsidiary of the Hongkong and Shanghai Banking Corporation Limited (HSBC), has entered into an agreement to acquire a 14.71 per cent equity stake in the UTI Bank Limited, from the CDC Financial Services (Mauritius) Limited and the South Asia Regional Fund, for a consideration of Rs. 3.06 billion ($66.42 million).

In addition, the HSBC will have the option to acquire an additional 5.37 per cent of the UTI Bank Limited from the CDC Financial Services (Mauritius) Limited at a consideration of Rs. 1.12 billion ($24.26 million).

The HSBC will also be making an open offer to the UTI Bank's shareholders to buy at least an additional 20 per cent of the Bank at an offer price of Rs. 90 per share ($1.95 per share). "This offer is in accordance with the Indian regulations,'' the HSBC stated in a press release issued late in the night here today.

With some 200 branches and extension counters and 1000 ATMs nationwide, the UTI Bank has one of the largest retail banking networks amongst private sector banks in India. The Bank was established as a private sector one in 1994, by the Unit Trust of India (UTI).

David Eldon, chairman of the HSBC, said, "This is an investment in a well- managed local financial institution which will allow us to participate more fully in the fast-growing financial sector in India. We have had a long history in India of over 150 years and with this new investment, we aim to strengthen our presence in this dynamically growing economy.''

The agreement and open offer are expected to be completed by April 2004.

The remaining 79.92 per cent interest in the Bank is held by a number of entities and shareholders, including Government institutions, corporate investors and individual shareholders.

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