Emirates NBD has decided to quit the proposed acquisition of IDBI Bank and is expected to seek a majority stake in RBL Bank, reported The Hindu Businessline, citing sources.
The Dubai-based financial institution offered $6bn to $7bn for a 61% stake in IDBI Bank in May this year, after talks with the Department of Investment and Public Asset Management (DIPAM).
However, Emirates NBD is shifting its focus to RBL Bank, due to delays in the completion of the IDBI bank deal, said the publication.
A source told The Hindu Businessline: “Emirates NBD is very close to acquiring a major stake in RBL Bank, in phases. The government and regulator are both keen on bringing foreign investors into domestic banks, given the added pressure on account of tax rate cuts and US tariffs.”
In May, Emirates NBD received ‘in-principle’ approval from the Reserve Bank of India (RBI) to establish a wholly-owned subsidiary in India.
Reuters reported in August that India completed due diligence for the sale of the stake in IDBI Bank and plans to invite financial bids between October and December.
Current Indian regulations allow foreign players, including portfolio investors, to own up to a 74% stake in Indian banks, but strategic foreign investors are limited to 15%.
Earlier this week, Emirates NBD Bank was reported to be close to finalising a deal to acquire a major share of RBL Bank, an India-based private sector bank.
This transaction could see Emirates NBD taking over up to a 60% stake in RBL Bank, with an estimated value of approximately $3bn, reported NDTV Profit, citing sources.
The initial phase of this transaction would involve purchasing a 26% stake from existing institutional investors, followed by a public offer to acquire an additional 25%.
Although Emirates NBD may secure a large shareholding, RBI regulations are expected to restrict its voting rights to only 26%.
