Prem Watsa-controlled Fairfax Financial Holdings plans to expand IDBI Bank into a unified financial services company, with its other existing Indian investments in insurance, ​investment banking and wealth management combining under the lender.

IDBI Bank will become the holding company by transferring the stakes of Fairfax’s holdings in IIFL Capital Services and Go Digit Life Insurance Ltd and Go Digit General Insurance Ltd (collectively Digit) to the lender.

Fairfax owns a 30.2% stake in IIFL Capital Services and is in the process of upping it to 51% through an open offer. IIFL Capital Services runs investment banking and wealth management businesses.

The Canadian investment group also owns a 49% stake in Digit, which has general and life insurance operations.

Fairfax will need approvals from the Reserve Bank of India (RBI), market regulator SEBI and insurance regulator IRDAI.

The government has approved the sale of a 60.7% stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore ($5.56 billion), making it India’s largest cross-border bank deal.

Rakesh Sharma, the ​current managing director and CEO of IDBI Bank, will lead the proposed combined entity, while NS Kannan, the former chief  of  ICICI Prudential Life, will serve as its chairman.

CV Rajendran, the former CEO of CSB Bank, will also take a leadership role, Fairfax said in a statement.

Fairfax will not make any changes to the governance, management or operating structure ​of Digit or IIFL ​Capital following the proposed restructuring.

On CSB Bank, in which Fairfax holds a 40% stake, Fairfax has yet to take a call on whether it would go for a merger or a sale.

Fairfax Financial Holdings ​Chairman Prem ⁠Watsa said in a conference call that the RBI has given the company two years to decide whether to merge or sell CSB Bank.

Faifax, in its call, also said the purchase of IDBI stake will be funded by ⁠cash ​on the books of the holding company, dividend from ​subsidiaries, potential asset sales and contribution of its stakes in Digit and IIFL Capital at market value. 

Fairfax Financial Holdings had cash and securities worth $4.6 ​billion as of June-end.