Why ICICI Bank employees are dialling ICICI Securities shareholders

Five shareholders said the ICICI Bank’s branch employees have called and made home visits persuading them not just to vote, but also to vote in favour of delisting. While all five got calls, only one got a home visit. The callers sometimes even asked for proof of voting in the form of screenshots of a confirmation message received after e-voting, the investors said.

In June, the boards of private sector lender ICICI Bank and its broking arm ICICI Securities had approved the delisting of equity shares of ICICI Securities. Investors are proposed to receive 67 shares of ICICI Bank for every 100 shares of ICICI Securities they own. While ICICI Bank had appointed JM Financial Ltd, ICICI Securities had appointed BofA Securities India Ltd to provide a fairness opinion on the ratio based on the joint valuation report by PwC Business Consulting Services LLP and Ernst & Young Merchant Banking Services LLP.

While influential proxy advisory firms IiAS, InGovern and Stakeholders Empowerment Services (SES) whose opinion can sway the voting decisions of large institutional shareholders have greenlighted the resolution, some retail investors are unhappy with the swap ratio.

“Last week, someone from ICICI Bank called me asking me to vote in favour of the resolution, telling me that the voting process is going on and I need to vote in favour of the delisting," said Sreenivas K, a 47-year-old engineer from Hyderabad. Sreenivas was taken by surprise and said he had already voted against the proposal.

Meanwhile, Apurba Das, a shareholder of ICICI Securities and a customer as well as shareholder of ICICI Bank, said that his relationship manager from the bank had been following up with him for several days to check if he had voted. While he maintains that the relationship manager did not explicitly ask him to vote in favour of the delisting, the relationship manager was implicitly nudging him towards it, he said.

“After I voted, they asked for screenshots as proof of voting too," said Das.

Similarly, Tarun Balotia, a 31-year-old software engineer from Bengaluru got a visitor at his registered address in New Delhi. He said he first received a call on Tuesday morning from a person who identified herself as an ICICI Bank employee. The person told Balotia that she was at his home address in New Delhi and asked if he had voted on the delisting proposal.

“She also asked me for the screenshot of the e-voting confirmation and I told her I do not have one but have already cast my vote," said Balotia. He said later at around 1:30 pm on Tuesday, he got calls from his father informing him that some employees of ICICI Bank visited the address, asking for a screenshot of e-voting. “I told my father to tell them I was at work and not entertain them any further," said Balotia.

Emails sent to ICICI Bank and ICICI Securities remained unanswered till press time.

However, a person aware of the development said that at many banks, the relationship manager is not just in charge of the savings bank account of the customer, but also of his/her relationship at the whole bank level, including securities held in demat accounts. That, the person said, could be the reason why bank employees have called up some retail investors.

As of 31 December, ICICI Bank held 74.77% stake in ICICI Securities, while retail shareholders held 5.86%, while most of the remaining stake is held by mutual funds, foreign portfolio investors and the Life Insurance Corp. of India (LIC).

“ICICI Bank is pushing for the delisting and merger of ICICI Securities because the current valuations are more attractive to the bank than to ISEC shareholders," said Ajit Dayal, founder, Quantum Mutual Fund which has a 0.09% stake in the broking subsidiary. Dayal said he is perplexed that even the proxy advisory firms have recommended investors to vote for the delisting. “They are supposed to be neutral and keep the interest of investors in mind when recommending a resolution."

Experts pointed to two issues with the whole episode - possible breach of data privacy when shareholder information is shared, and solicitation of votes.

“If the information of shareholders of ICICI Securities is shared with ICICI Bank employees for the purpose of vote solicitation, it raises concerns around data privacy and corporate governance," said Shriram Subramanian, founder and managing director of InGovern Research Services. “If the services of a third party specializing in shareholder outreach are used, then it’s different."

Sachin Chaudhary, a Delhi-based engineer and shareholder of ICICI Securities, said he got calls from a person identifying as an ICICI Bank branch manager.

“He asked me which way I would be voting and when I said I was against the delisting, he started convincing me to vote for it," Chaudhary told Mint. “I told him I do not need his advice." Chaudhary said that he was surprised his contact details were with an ICICI Bank employee despite never having dealt with the bank as a customer or a shareholder. In fact, he is not even a customer of ICICI Securities, he said.

Founded in 1995, ICICI Securities provides institutional and retail broking services, including extending margin trade finance and ESOP finance, distribution of financial products, merchant banking and advisory services. The company got listed in 2018.