Temasek, GIC can buy more of ICICI

Singapore may open doors to Indian banks in quid pro quo

MUMBAI: The Reserve Bank of India has allowed Temasek Holdings and the Government of Singapore Investment Corp (GIC), investment agencies of the Singapore government, to hold up to 10% stake each in ICICI Bank.

“According to the procedure, the shares will be bought first and then RBI acknowledgement needs to be got. In this case, as a one off, we have already given permission to both the companies to hold 10% each in ICICI Bank,” an RBI spokesperson told DNA Money.

The RBI clarification comes after foreign minister Pranab Mukherjee told the Straits Times in Singapore on Monday that Temasek and GIC will be treated as separate entities for the purpose of investments in Indian banks.

The treatment of these companies as two different legal entities means that their collective stake can go up to 20% in the largest Indian private bank. Currently their collective stake in ICICI Bank is 9.57% (Temasek 7.37%, GIC 2.24%).

But ICICI Bank chief financial officer, Vishakha Mulye said the bank had not received any communication from the RBI on this.

The RBI had objected to Temasek and GIC’s attempts to increase their stake in ICICI Bank to 10%, pointing out that they were both owned by the Singapore government.

The green signal is likely to be followed up with a quid pro quo - Singapore is expected to now allow Indian banks to open branches in the island-nation.

“This is about give and take. Following the RBI approval, Singapore will (have to) ensure that more Indian banks are allowed to open branches in their country,” said an official from Indian Banks’ Association, who did not wish to be named.

The State Bank of India and the ICICI Bank itself have been waiting from a nod from the Singapore authorities to start business. ICICI chief spokesperson Charudatta Despande clarified that both companies were free to participate in the current public issue “to maintain their current level of holding.”

ICICI is in the process of raising Rs 20,125 crore this approximately half of which will be raised from the domestic market, issue for which is open from Tuesday to Friday.

Currently the foreign stake in the bank is 71.57% (including 45.02% FII investment and 26.55% ADS). The go ahead to the Singapore companies means that they are in a position to bid for a larger pie of the new share sale in ICICI Bank.

The bank plans to mop-up Rs 8,750 crore with a greenshoe option of Rs 1,312 crore, which is one of the largest to have hit the the Indian market.

It is the third follow-on issue of the bank. Besides the local issue the bank plans to raise Rs 10,062.5 crore through American depositary shares.