Bandhan Bank holder seeks $1.4bn in stock sale

Bloomberg

Bandhan Bank Ltd.’s main shareholder sold $1.4 billion of its stake in India’s most profitable bank to meet the regulator’s ownership rules.
Bandhan Financial Holdings Ltd. sold 337.4 million shares in the Indian lender at 313.1 rupees in a block trade on Monday, according to deal teams seen by Bloomberg News. The company’s shares plunged 11% to 307 rupees in Mumbai, heading for the biggest loss since March 30.
The latest sale helps founder and Chief Executive Officer Chandra Shekhar Ghosh cut his stake to 40% from 60.95%, according to data available as of June.
The RBI imposed restrictions on branch expansion by Bandhan Bank, which specializes in lending to small borrowers, after it failed to lower its stake to 40% last year. Bandhan Bank then agreed to combine with mortgage financier Gruh Finance Ltd. in a $11.7 billion deal to pare founder’s stake as mandated, following which the central bank partially relaxed its curbs on the lender.
“RBI is very clear that shareholding in private banks should be diversified as it reduces concentration risk,” Karthik Srinivasan, group head, financial sector ratings at ICRA Ltd., the local arm of Moody’s Investors Service. “The urgency of stake sale by Bandhan founders shows that RBI is on its track on its rules regarding shareholding in private banks.”
The central bank is currently reviewing its norms on shareholding in private banks, which stipulate founders cut their stake to 15%, as it aims to improve corporate governance in a sector plagued by bad loans.
Some of Bandhan Bank’s profitability metrics, including return on assets and return on equity are the highest among Indian banks.