Union bank

Union Bank: Union Bank will buy the shares of BoB, IOB in a Malaysian entity

Mumbai: Union Bank of India (UBI) will buy out the 75% stake jointly held by Bank of Baroda (BoB) and Indian Overseas Bank (IOB) in India International Bank Malaysia, making it a 100% UBI unit, two people directly abreast of development said.

“IOB did not want to continue in the business due to its capital issues as it was under fast-track remedies from the RBI. So it was a choice between BoB and Union. After discussions, BoB decided that ‘It was better for Union Bank to take full control of the bank,’ said one of the people quoted above.

The proposal awaits formal approval from the central bank, which has expressed its will in principle. It will also require government approval, including the green light from the Ministry of Foreign Affairs, as the bank is of strategic importance. Those approvals should come before the end of June, those people said.

India International Bank was incorporated in Malaysia in August 2011 and commenced operations in July 2012. The former Andhra Bank was the initial promoter of the bank with a 25% stake, along with BoB and IoB. After Andhra Bank merged with UBI in April 2020, the stake was transferred to UBI.

“Each of the three banks with shareholding had people assigned to the bank, which was not ideal for management. As a result, the bank has not gone anywhere in the last 10 years. total to a lender will help make a clear strategy and be beneficial to the bank,” said a second person quoted above.

UBI will have to spend ₹180 crore to buy out its co-shareholders’ stake at current book value. Admittedly, the bank’s loan portfolio is less than ₹1,000 crore, which is not even half a percent of UBI’s 6.69 lakh crore loan book.

At the end of the quarter ended March 2021, the latest figures available on its website, India International Bank slipped to a loss of 70,000 ringgits (about ₹12.6 lakh) on a profit of 789,000 ringgits (₹1.42 crore). ) mainly due to the 40% year-on-year drop in net profit.