LIC to vote on IDBI Bank stake buy

Life Insurance Corp of India will next week decide on taking control of IDBI Bank Ltd by acquiring shares from minority shareholders, according to people familiar with the matter.The board of India’s largest insurer will meet on September 4 to consider acquiring a 36% stake in the ailing lender, sources said, asking not to be identified citing rules.That’s in addition to an approval it won to subscribe to the preferential issue of IDBI Bank’s shares, according to a stock exchange filing. The government already approved a plan to cut its stake in the lender to below 50% from 59.7% now, to make way for the deal.The stake purchase by the insurer will help meet the immediate cash requirements of IDBI Bank, which has one of the highest ratio of soured loans among lenders at more than 30%.India’s capital market regulator mandates an open offer to buy out remaining shareholders when an entity acquires 25% or more of a listed firm. For the deal to go through, the Insurance Regulatory and Development Authority of India separately waived off a norm that restricts insurers from owning more than 15% of a single company.The Delhi High Court, which is separately hearing a petition against the proposed deal, yesterday sought details on how investment regulations were relaxed and asked LIC not to proceed with the deal until the next hearing of the case on August 30.IDBI Bank’s shares fell as much as 5.8%, the most in more than two years, before recovering to close down 0.7% yesterday.