Lakshmi Vilas is a major setback for the bank’s shareholders. From today, trading of bank shares on BSE and NSE has been suspended. In fact, on Wednesday, the Cabinet has approved the proposal made by RBI for the merger of Lakshmi Vilas Bank Limited. After which the bank will now merge with DBS Bank’s India unit. Due to this, the trading of shares of Laxmi Vilas Bank has been suspended from 26th November to today. From 27th November, both banks can be one.
The stock closed yesterday at 4.79% gain
The stock of Lakshmi Vilas Bank closed at Rs 7.65 with a gain of 4.79 per cent. Its stock had weakened nearly 55 per cent in 7 days. The stock also closed at the same price on the NSE. The stock exchange had said that the bank’s shares would remain suspended since the market closed on November 25. The 1-year high for the stock was Rs 25.18 and the 1-year low was Rs 6.95. The bank’s market cap closed at Rs 257.59 crore. Talking about the last one year, the stock fell from Rs 20 to 7.65.
The two banks will unite from November 27
The cabinet has approved the merger of Lakshmi Vilas Bank with DBS Bank, which is struggling due to lack of cash. After the Cabinet approval, Laxmi Vilas Bank will be merged with the Indian entity of Singapore’s largest bank DBS Bank. The Reserve Bank has said that this merger will come into effect from November 27 and the moratorium on Laxmi Vilas Bank will also be removed from this day itself. The Reserve Bank has also said that the depositors of Lakshmi Vilas Bank will be able to operate their accounts as customers of DBS Bank India from Friday.
What effect on shareholders
Under the bailout package, depositors of Lakshmi Vilas Bank will get all their money. Even if they want to keep their money in the bank, it will be safe. According to RBI’s plan, employees of Lakshmi Vilas Bank will become employees of DBS Bank. But the shareholders of Lakshmi Vikas Bank will incur losses. Currently, Laxmi Vilas is the bank’s net worth negative. In such a merger, the bank’s shareholders will not get money.