Lakshmi Vilas Bank+Indiabulls merger plan after Bank Of Baroda, Vijaya Bank, Dena Bank become one: Key points

Lakshmi Vilas Bank + Indiabulls Merger: Days after Bank of Baroda, Vijaya Bank and Dena Bank became a single entity, another merger is on the cards. On Friday, Lakshmi Vilas Bank (LVB) announced it will merge with Indiabulls Housing Finance (IBHF). The merger will create India's eighth largest private sector lender. The all-stock merger deal will, however, be keenly watched, especially about how it will pass the regulatory tests. Here are some of the key points to know about the proposed merger that still needs regulatory approval: 

- Indiabulls is the second largest pureplay mortgage lender IBHF. Its promoters are exposed to the realty sector, which is something that may make the banking regulator uncomfortable. However, last year, RBI had okayed similar mergers like that one of HDFC-promoted affordable housing-focused Gruh Finance's merger with Bandhan Bank and merger of mid-sized NBFC Capital First with IDFC Bank last year. 

- On approval, the merged entity will likely be named 'Indiabulls Laxmi Vilas Bank'.

- LVB managing director Parthasarthi Mukherjee as telling reporters that the board of the old generation private sector bank, which has two RBI nominees, had unanimously voted to go ahead with the merger. The bank has also had informal dialogue with the Reserve Bank on the merger plan and that was no hint of any disapproval so far.

- With the expected merger, LVB bank will get the required growth fund and an entry into the Northern and Western states where Indiabulls has a strong presence. In return, the mortgage lender will get low-cost funds.

- Recently, Indiabulls has been facing difficulties because of the NBFC crisis that started last September following the IL&FS bankruptcy. LVB has a loan portfolio of Rs 25,000 crore, while the same for IBHF is over Rs 1 lakh crore. 

- Deal conditions: As part of the deal, 14 shares of Indiabulls will be given to every 100 shares of LVB. The merged entity will have IBHF promoter Sameer Gehlaut as vice-chairman. 

Watch this Zee Business news

- On Friday, Indiabulls shares gained 0.53 per cent to Rs 903.15 while the LVB rallied 4.98 per cent to Rs 92.75 on the BSE.