LIC Housing- IDBI Bank merger put on fast track

               

  "LIC Housing cracks 12% as reports suggest merger with IDBI Bank on fast track"

                       LIC has decided to hasten the process of merging IDBI bank with its housing finance bank, Life Insurance Corporation Housing Finance. This is because of two consecutive quarters of operating profit for IDBI bank.Shares of LIC Housing Finance cracked 12 per cent in Monday’s early trade after reports that the country’s biggest institutional investor Life Insurance Corporation of India (LIC) may speed up the process of merging its housing finance arm with IDBI Bank.

                    At present, the market capitalisation of LIC Housing Finance and IDBI Bank is Rs 18,700 crore and Rs 37,214Cr. LIC holds 51 per cent stake in IDBI Bank and 40.13 per cent in LIC Housing Finance, according to BSE.

                  LIC’s open- offer document in 2018 to acquire 26per cent stake in IDBI Bank from the secondary market had said it was restricted to conducting its housing finance business through two subsidiaries, and either IDBI Bank or LIC Housing Finance would have to cease conducting housing  finance activities within a period of five years. LIC holds 51 per cent stake in IDBI Bank and 40.13 per cent in LIC Housing Finance

                Life Insurance Corporation on Monday said there is no proposal to merge its subsidiary LIC Housing Finance Ltd (LICHFL) with any other entity.The statement came after some reports suggested that insurance behemoth LIC might expedite the process of merging LICHFL with its banking arm IDBI Bank.

KEY CONSIDERATIONS

• LIC's open-offer document permits only one of its subsidiaries -LIC Housing or IDBI Bank- to conduct housing finance business
• LIC to complete business reorganization by 2023
• Merger to help LIC bring down shake in IDBI Bank to less than 51%
• LIC has indicated offloading some shares in the bank ahead of its IPO
• RBI allowed LIC time till 2030 to reduce shake in IDBI