Canada-India $5.5 billion bank deal opposed by workers, politicians

Canadian firm Fairfax Financial Holdings’ proposed $5.5 billion takeover of IDBI Bank is facing pushback from employees of the Indian state-owned lender and political parties in the country.

On Sunday, the United Forum of IDBI Officers and Employees called for a two-day “nationwide” strike against the sale of the bank to Fairfax. The workers’ union also expressed “grave concerns” about the transparency of the sale and valuation process, according to a post on X.

It is demanding that the government “cancel the privatization process” and instead focus on strengthening the bank while protecting public investment and employees’ interests.

Last week, Rahul Gandhi, India’s leader of the opposition, extended support to the IDBI Bank employee unions opposing the takeover by Fairfax. “Public banks are not assets to be sold off, they are tools to build the nation,” Gandhi said in a statement on Thursday.

He added that the sale of over 60% stake in IDBI Bank to Fairfax goes against the commitment of previous governments to hold a 51% stake in the state-owned lender.

Nirmala Sitharaman, India’s finance minister, in her response said the public sector bank was handed to the government in “poor shape” and was revived through “professionalism, prudence” and recapitalization of more than 250 billion rupees ($2.6 billion).

“The IDBI Bank is now poised for its next phase of growth,” the finance minister said. The government has previously said that the next phase of growth will be driven by a strategic investor.

The Indian government on Oct.14 said the sale of over 60% of the share in IDBI will mark the largest foreign direct investment transaction in India’s financial sector. Fairfax made a bid to pay 81 rupees per share for IDBI against the average fair value set at 75.99 rupees apiece.

On Monday, shares of IDBI opened at around 79 rupees per share.

However, Indian media outlet Businessworld on Thursday reported that government officials had suppressed the valuation of IDBI to make Fairfax’s offer seem attractive. The Ministry of Finance has defended its procedure, adding that the bidding process was a “double blind” as the bidder did not know the valuation and the valuators did not see the bids.

The Indian government has been divesting stakes this year as it pushes to keep the country’s growth engine running amid deepening fiscal pressures. It sold shares in several companies, including Cochin Shipyard, Indian Railways Finance Corp, NHPC and Coal India. In August, it got $3.3 billion for a 6.5% stake in the country’s top life insurer, Life Insurance Corporation of India.