MUMBAI: Shares of Indiabulls Housing Finance (IBHF) crashed 19 per cent to close at Rs 195 after hitting a low of Rs 187.50, while shares of Lakshmi Vilas Bank (LVB) sank 5 per cent to hit lower price band, as well as one-year low of Rs 25.65 on the BSE after the Reserve Bank of India (RBI), rejected their merger proposal.
Both the entities tried to put behind months of uncertainty announcing plans to raise capital and move forward after the merger failed.
LVB said it will continue to work towards raising capital as per the permitted modes.“We started our journey in 1926. The bank has witnessed lot of business cycles punctuated with booms and recession. LVB continues to stand resilient and stronger as always,” said the bank.
“Now that the merger will not happen with LVB, the uncertainty of last five months on the business is lifted and the company will focus on its growth of the core business of housing finance,” IBHF said.
The company has also announced a board meeting to be held on October 14 to consider buyback of shares.
It went on to elaborate its financial strength of having liquidity and cash balances of over Rs 18,000 crore and net worth of Rs 19,000 crore. The merger process, which started in early April came to an end.
Meanwhile, LVB saw its CEO exit, and the bank being brought under RBI’s Prompt Corrective Action. On the other hand, IBHF had to contend with allegations of wrong doing and a PIL seeking investigation from regulators.
LVB further said it will continue to look at other sources of bolstering capital.
“This brings an end to recent uncertanity and the bank will continue to work towards raising capital as per the permitted modes in compliance with all applicable acts and regulations,” LVB CFO S Sundar said, adding the bank has witnessed a lot of business cycles punctuated booms and recession.
“LVB continues to stand resilient and stronger as always,” he said, adding the merger would have helped LVB get the much-needed capital, while IBHF would have got access to cheaper deposits.