For banks, the last quarter of the financial year is usually time for
consolidation rather than change. This is the time when they go full
throttle on lending and beef up their top line before closing their
books for the year. The year 2019 will, however, see a lot of
front-ending of events in the private sector and also among state-owned
lenders as the government is likely to push through some key decisions
ahead of the elections.
On the cards is a decision on transfer of surplus funds by the Reserve Bank of India (RBI)
to the government. This is likely to follow the report of the Bimal
Jalan-led committee, which is expected before end-March 2019. The
government is simultaneously going full-steam ahead on its decision to
consolidate the three public sector banks — Bank of Baroda, Dena Bank and Vijaya Bank. Management consultancy firm EY has already been appointed to help in the process.
The other major M&A activity in the public sector that will
conclude in the first quarter of 2019 will be LIC’s acquisition of IDBI Bank. LIC has said that it will pay shareholders who respond to its open offer for purchase of IDBI Bank
stock on December 31. This means that the process will be completed in
the third quarter. LIC’s acquisition, through infusion of fresh capital,
will bring IDBI Bank out of RBI’s prompt corrective action plan. LIC
plans to professionalise IDBI Bank on the lines of Axis Bank.
Additionally, the fourth quarter is when SBI’s mega qualified institutional placement of equity shares is expected. SBI aims to raise Rs 20,000 crore as it prepares itself for a surge in lending in 2019.
Early 2019 will also see the conclusion of the last chapter in the
high drama in several private banks. Justice B N Srikrishna, who is
looking into the conflict of interest allegations at ICICI Bank,
is expected to submit his report in the coming weeks. This will put an
end to the controversy in the bank, which culminated in the resignation
of Chanda Kochhar. In Kotak Bank, the Bombay high court will decide on
the lender’s plea to retain its promoter’s shareholding at above 20%. Kotak Mahindra Bank has filed a writ petition challenging the central bank’s order to dilute promoter holding to 20%.
The new year will be the most eventful for Yes Bank where the
lender’s founder, promoter and CEO Rana Kapoor is expected to step down
in January 2019 and make way for a new chief executive. The year is also
likely to see a truce between the two promoter group’s Rana Kapoor and
his sister-in-law Madhu Kapur who have been fighting in courts over the
right to appoint directors.
Axis Bank will also see a new beginning with newly-appointed CEO
Amitabh Chaudhury taking charge from January 1 in place of Shikha Sharma
who completes her term in December.
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