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NSE, BSE suspends trading in Lakshmi Vilas Bank; govt to merge it with DBS Bank

All the branches of the Lakshmi Vilas Bank will function as branches of DBS Bank India from November 27.

November 26, 2020 / 02:50 PM IST
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Shares of Lakshmi Vilas Bank (LVB) was suspended from November 26, 2020, from the NSE, as the bank merges with DBS Bank on November 27 and the stock will be delisted from the exchange on that day.

The Central government via a Finance Ministry notification on November 25 has sanctioned the final scheme of amalgamation between crisis-hit Lakshmi Vilas Bank (LVB) and DBS Bank India which will come into effect from November 27, 2020.

All the branches of the Lakshmi Vilas Bank will function as branches of DBS Bank India from November 27.

"Customers, including depositors of the Lakshmi Vilas Bank will be able to operate their accounts as customers of DBS Bank India with effect from November 27, 2020. Consequently, the moratorium on the Lakshmi Vilas Bank will cease to be operative from that date," said Lakshmi Vilas Bank in a regulatory filing on NSE.

The RBI had invited suggestions and objections on the draft scheme of amalgamation after placing LVB under a moratorium on November 17.

Read more: LVB - DBS Bank merger: Govt approves final scheme of amalgamation; no change in equity write-off clause

Jaikishan Parmar, Senior Equity Research Analyst, Angel Broking said in this merger, shareholders of LVB will not get any benefit.

"The entire capital of the bank will be written off post the merger with DBS Bank India," he said.

Parmar pointed out that compression in loan book impacted NII and other income which weakened pre-provision profit and continues deterioration of asset quality issue kept provision cost high for the last several quarters and these combinations led to losses.

Consequently, net worth got eroded and CRAR went way below regulatory requirement.

"We believe a merger would be beneficial for DBS bank as it would be able to grow business in the south that has business and individual route to Singapore. As of Q1FY21 DBS CRAR stands at 15.99 percent and GNPA and NNPA at 2.7 percent and 0.5 percent, respectively. DBS is ready to put fresh capital to initiate new business," Parmar said.

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first published: Nov 26, 2020 11:17 am