The Reserve Bank of India (RBI) has directed promoters of the Kochi-based Lord Krishna Bank (LKB) to bring down their stake to 10 per cent by 2009 from the current 65 per cent. | |
| Delhi-based Mohan Puri and associates are the promoters of LKB and had in 2005 made a futile attempt to merge the bank with the Kerala-based Federal Bank. |
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| LKB is seriously considering its plans for its initial public offering (IPO) to raise Rs 40 crore with the bank returning to profitability in 2005-06. |
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| The bank reported a net profit of Rs 3.68 crore in 2005-06 against a loss of Rs 24.41 crore a year earlier. Furthermore, the bank is also toying with the idea of a Tier 2 capital issue to raise the same amount of money. |
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| The proposed IPO will be aimed at bringing down the promoters' stake to 49 per cent as required under the first milestone set by the RBI, banking sources said. |
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| LKB's attempt to merge with Federal Bank failed over valuation. Federal Bank had put the acquisition cost at Rs 300 crore but LKB demanded a valuation of Rs 450 crore, almost thrice the size of its book value of Rs 16.95 per share. |
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| There were also rumours of loss-making LKB being put under a moratorium. Bank officials, however, ruled it out as its financial position has improved. Its capital adequacy ratio is above 10 per cent and gross NPAs are below 4 per cent. |
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| The officials also said the rejuvenation plan implemented in the bank had resulted in a paradigm shift in its working in recent months. The bank has also made a considerable progress in the recovery of NPAs. |
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| A top official of the bank said LKB was also drawing up plans to expand its presence across the country. The bank has applied for licences to open 20 new branches to add to its existing 112 branches. |
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