RBL Bank Awaits Regulatory Approvals for Emirates NBD Fund Infusion

Strategic Insights -

RBL Bank expects the proposed USD 3 billion fund infusion from Emirates NBD Bank to close by June next year, subject to regulatory and government approvals. The deal will see RBL Bank merge with a wholly-owned subsidiary of Emirates NBD in India, becoming a "listed foreign bank subsidiary." The capital infusion will enable RBL Bank to grow multi-fold and move into the league of large banks within three to five years.

Key Takeaways:

  • The proposed deal involves a USD 3 billion fund infusion from Emirates NBD Bank, the largest FDI in the financial services sector.
  • RBL Bank will merge with Emirates NBD's wholly-owned subsidiary in India and become a "listed foreign bank subsidiary."
  • The capital infusion will increase RBL Bank's capital adequacy to 40% from the present 15%.
  • The deal will help RBL Bank grow its corporate book by writing bigger loan cheques and enable it to enter the wealth management business.
  • The shareholders of RBL Bank will vote on the Emirates NBD Bank stake buy proposal at an extraordinary general meeting on November 19.
  • The regulatory nod process, including RBI, government, and CCI approvals, will start concurrently and take about six months to complete.
  • Emirates NBD will pick up to 60% stake in RBL Bank through preferential allotment, ensuring that the minimum public float remains at 25%.
  • The UAE-based bank's stake buying interest comes at a time when the government is looking to sell a majority stake in IDBI Bank.
  • The deal will lead to an open offer to acquire 26% stake in RBL Bank, depending on the response to which the preferential allotment of shares will be structured.

Statistics:

  • USD 3 billion: The proposed fund infusion from Emirates NBD Bank.
  • 40% and 15%: RBL Bank's capital adequacy post-deal and present capital adequacy, respectively.
  • 26%: The proposed stake acquisition through an open offer.
  • 60%: The proposed stake acquisition through preferential allotment.
  • November 19: The date of the extraordinary general meeting called to vote on the Emirates NBD Bank stake buy proposal.
  • 5-8 months: The time frame for the funds from Emirates NBD Bank to come in after the deal is finalized.

Sources:

  • Business Desk, Indian National Press (Bombay) Pvt. Ltd., distributed by Contify.com.