UWB shareholders exception to the rule
MARKETS BUREAU
Posted online: Wednesday, September 13, 2006 at 0000 hours IST
MUMBAI, SEPT 12: The Reserve Bank of India (RBI)’s go ahead to the IDBI scheme involving amalgamation of United Western Bank (UWB) and payment of Rs 28 per share upfront to the UWB shareholders have made UWB’s shareholders the most fortunate lot among shareholders of those banks which have either fallen or have gone bust. Back-of-the-envelope calculations show IDBI is expected to pay Rs 151 crore to acquire 5.38 crore UWB shares.
The UWB retail shareholders (with holdings of value below Rs 1 lakh), who number around 50,000 (48,295 to be precise) have emerged the most fortunate among their peers who held shares either in Global Trust Bank (GTB) or Nedungadi Bank. The shareholders of GTB and Nedungadi Bank, which were put under moratorium and were merged with Oriental Bank of Commerce (OBC) and Punjab National Bank (PNB), respectively were not offered any compensation at all.
At the time of the merger, the banks with which GTB and Nedungadi Bank were merged, had said payments to the shareholders of these banks, if any, will be given at the end of a 12-year period, after the banks which have taken them over find any surplus left with them.
On Monday, September 4, 2006, the UWB stock had gone into a free-fall mode as the news of RBI imposing a moratorium on the bank percolated in the market. On that day, the stock lost nearly 60% during intra-day trades to touch a low of Rs 10, before closing at Rs 16.15. The RBI had decided to put UWB under moratorium on Saturday, September 2, 2006.
However, since then, the stock has been on an upswing and has gained ground on most of the trading sessions. In the last one week, the stock has gained an impressive 22.57% or Rs 3.95. On Tuesday, however, the stock closed at Rs 21.45, shedding 2.72% or Re 0.60. The volumes on the counter have also been witness to a massive and sudden spurt in the last one week. On an average, a total of nearly 49 lakh shares of UWB changed hands on BSE. Prior to the moratorium, the 2-week average of the counter was pegged at less than 16,000 shares.
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