DBS Faces Lawsuits in India Post-Takeover of Lakshmi Vilas Bank
Holders of Lakshmi Vilas Bank took legal actions against DBS’s local unit in various high courts in India.
(Bloomberg) -- DBS Group Holdings Ltd., Southeast Asia’s largest lender, said it’s facing lawsuits in India related to its recent takeover of a struggling local bank.
Holders of Lakshmi Vilas Bank Ltd.’s equity shares and Tier-II bonds that were written off before the effective date of amalgamation took legal actions against DBS’s local unit in various high courts in India, the Singapore-based lender said in a reply to questions from Bloomberg News. The acquisition was completed on Nov. 27, DBS said earlier this month.
“DBS has no incremental unprovided risks on these lawsuits,” it said. “Other legal liabilities in the normal course of business have also been suitably provided for.”
DBS’s Lakshmi Vilas acquisition was the first time the Reserve Bank of India turned to a foreign lender to bail out a local bank as India’s financial industry suffered a series of shocks since the outbreak of a shadow banking crisis in 2018.
While the suits named DBS’s India unit as a respondent, the primary respondents would be the Indian government and the RBI, who drafted and approved the amalgamation program, according to DBS. An RBI spokesman declined to comment on the matter.
DBS’s Chief Executive Officer Piyush Gupta expects Lakshmi Vilas to become profitable in 12 to 24 months as the Singapore bank sets aside amalgamation expenses and allowances for soured assets, he said at a Feb. 10 earnings media briefing.
The Business Times earlier reported the suits and DBS’s comments.
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