The opposition by F&G depositors to convert 80% of deposits of the Finance and Guarantee Company Ltd (F&G) to shares has put the brakes on Union Bank (UB)’s plan to acquire the company through the infusion of new capital of Rs.1.1 billion, Central Bank sources said.
UB is insisting that F&G should convert 80 % of the company’s deposits to non voting shares with the consent of depositors.
Depositors however are against this move, and discussions are underway to finalise the bank’s decision to acquire the company but it is possible that this decision may be reversed, the sources added.
They said the UB has agreed to pay deposits with maturity period ending in June 2011 while other deposits should be converted to shares.
The company deposit base is over Rs 3 billion with over 50 % of the company’s deposits to be converted to non voting shares with the consent of depositors, one source said, adding that 30% are opposed to the move.
Several depositors told the Business Times that F&G is delaying paying the due interest of depositors while failing to refund the capital of many depositors on maturity claiming a cash flow problem. |
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