The Hindu Business Line : LIC hikes stake in Union Bank

Mumbai, May 13 Life Insurance Corporation of India has increased its stake in Union Bank of India by 2.03 per cent over the past four months, a disclosure by the bank to the stock exchanges said.

The insurance company’s stake in the bank now stands at 9.18 per cent.

The bank’s disclosure said LIC has been gradually increasing its stake in the bank since the beginning of the year. LIC has bought 1.02 crore (2.03 per cent) shares of Union Bank between January 28 and May 8 through open market purchases.

The bank’s shareholding pattern as on March 31 showed LIC’s stake at 7.5 per cent.

The share price of Union Bank of India rose 2.31 per cent to close at Rs 168.35 on the BSE on Wednesday. LIC has been increasing its holding in banks through the previous fiscal. Banks have been showing substantial growth over the last few years. In the wake of the problems in the financial sector worldwide, the Government may have wanted to strengthen its holding in Indian banks through LIC, said marketmen.

Some of these banks have been trading at low P/E ratios, which could be a reason why LIC is increasing its stake in them, said Mr Alex Mathew, Head of Research of Geojit BNP Paribas Financial Services.

An increase in stake by LIC increases investor confidence in the company, said Ms Anita Gandhi, Head of Institutional Business at Arihant Capital Market. “They are long-term investors and are not moved by the daily ups and downs of the market.”

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