|
| Federal Bank starts due diligence to acquire CSB |
| George Joseph / Kochi Sep 23, 2009, 00:07 IST |
|
Inching closer to taking over Catholic Syrian Bank (CSB), one of the oldest private sector lenders in Kerala, Federal Bank has started the process of financial due diligence. Leading consultancy firm KPMG is doing the job for Federal Bank.
Sources close to the development said that it would take Federal Bank at least a month to complete the process, which was started as per the decision of the bank’s board of directors taken on September 18.
An executive director of the bank, who did not wish to be named, told Business Standard that no decision on swap ratio was taken so far. Decisions, he said, on crucial issues would be taken on the basis of the due diligence report.
The annual general meeting (AGM) of CSB held on August 28 had elected TS Anantharaman, K Iype Peter and Sumeer Bhasin to the board of directors. They replaced KA Menon, George Sebastian and George Chemmanur, who were opposing the merger move. Among the newly elected board members, Peter is a former general manager of Federal Bank. Another board member is the main negotiator on behalf of Surachan Chansri Chawla, a Bangkok-based Indian businessman, who holds 23 per cent in CSB.
With the AGM replacing the three opposing board members, the deal seems certain to happen as soon as the due diligence gets over and the merger gets the Reserve Bank of India’s approval. There were reports that Federal Bank was ready for an outright purchase, a move CSB shareholders opposed tooth and nail. Therefore, a consensus is essential for a swap ratio, which will be decided after the due diligence. At present, Federal Bank is holding 5 per cent share in CSB.
Federal Bank wants the merger as this will make them the largest old-generation, private sector bank in the country. The bank had earlier taken over Ganesh Bank of Kurundwad. However, its attempt to take over Lord Krishna Bank (LKB), another Kerala-based private sector lender, had failed. So, in the case of CSB, Federal Bank is treading cautiously.
CSB has 363 branches across the country, of which 240 are in Kerala. In 2008-09, the bank had a total business of over Rs 10,000 crore and a net profit of Rs 37.19 crore. The bank is yet to announce its first quarter results.Federal Bank has earned a net profit of Rs 136.38 crore for the first quarter of the current financial year, registering a robust growth of 100.12 per cent as against Rs 68.15 crore in the same period of last year.
Total business of the bank has touched Rs 55,012 crore. The bank has 622 branches and 641 ATMs on a pan-India basis.
The merger will reduce the number of Kerala-based old-generation private sector banks to three — Federal Bank, South Indian Bank and Dhanalakshmi Bank.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
