Lakshmi Vilas Bank Mergers With DBS Bank
1 min read
The government approves the merger of crisis-ridden Lakshmi Vilas Bank (LVB) with DBS Bank India Ltd (DBIL), a wholly-owned subsidiary of Singapore-based DBS Bank. This decision will give cushion to 20 lakh depositors & protect the jobs of 4,000 employees. With this #merger, RBI lifted 30-day moratorium restrictions on the withdrawal limit which was previously at Rs 25,000 per depositor
√ Why did DBS agree on merging with a distressed institution like LVB?
• S&P said the acquisition of LVB will not materially affect the financial position of DBS as LVB just has less than 1% of the DBS’s total assets. It will also expand DBIL’s footprint in India as it has around 500 branches, compared with DBIL’s 27. LVB is the 2nd private sector bank in #India after Yes Bank which ran into serious trouble in 2020. LVB, which has only a 0.2% market share, is the only non-government-owned bank under prompt corrective action
Before the merger, shareholders of LVB at their annual meeting ousted 7 directors of the bank, including its MD & CEO. The RBI had to step in & appoint a panel comprising 3 independent directors to support the functioning of the broken apart bank
Do you think if there wouldn’t have been RBI intervention into this, LVB would have gotten a buyer soon?
