The press release from DBS Group Holdings Ltd (SGX: D05) was short and terse.
Yet, it was met with raised eyebrows.
On 17 November past 10 p.m., the bank announced that the Reserve Bank of India, which is India’s central bank, had announced a scheme to amalgamate Lakshmi Vilas Bank (LVB) (NSE: LAKSHVILAS) with the Indian arm of DBS, known as DBS Bank India Ltd (DBIL).
According to the announcement, LVB is a 94-year old bank with a storied history as well as an established retail and small-and-medium enterprise (SME) customer base.
If this scheme is approved, DBS will inject a total of S$463 million into DBIL that will be fully funded by existing resources.
This seemingly innocuous statement immediately led to a flurry of activity, with a horde of analysts and journalists rushing to comment on the transaction.
The crux of the problem here is that LVB is a struggling Indian bank that has been bleeding losses for three consecutive years....