The Hindu : Business : Draft scheme to merge UWB with IDBI outlined

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Wednesday, Sep 13, 2006
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Draft scheme to merge UWB with IDBI outlined

Special Correspondent

RBI receives 17 EoI for restructuring United Western Bank

MUMBAI: The Reserve Bank of India (RBI) on Tuesday announced a draft scheme of amalgamation of United Western Bank Ltd. (UWB) with Industrial Development Bank of India Limited (IDBI).

"The draft scheme has been sent to both banks. The RBI has invited suggestions and objections on the draft scheme from the members of the public, including the banks' shareholders, depositors and creditors. Both banks have been given time up to September 27 to consider the draft scheme,'' the RBI stated in a press release. The RBI will take a view on the future set up of UWB soon thereafter.

As per the draft scheme, both banks have been given time up to September 27, to consider the draft scheme. The scheme inter alia provides that "The Transferee Bank shall make an upfront payment in cash of Rs. 28 in respect of every fully paid up share of the Transferor Bank". UWB shares were trading at Rs. 21.40 on the National Stock Exchange.

United Western Bank has been placed under an order of moratorium on September 2. The order is effective up to December 1 or an earlier date if alternative arrangements are in place.

The RBI received expression of interest (EoI) from 17 entities for taking over or restructuring of UWB. "The only restructuring proposal was from UWB, which envisaged help of the Government of Maharashtra and other investors. These proposals have been examined keeping in view protection of the depositors' interest, expeditious resolution and avoidance of regulatory forbearance. The interests of employees and shareholders of UWB were also kept in mind,'' the RBI added.

All the employees of the transferor bank (UWB) shall continue in service and be deemed to have been appointed in the transferee bank (IDBI) at the same remuneration and on the same terms and conditions of service, as were applicable to such employees immediately before the close of business on September 2, RBI stated.

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