Federal Bank to take over ailing Ganesh Bank

Federal Bank is looking to amalgamate Ganesh Bank of Kurundwad (GBK) with itself. The Reserve Bank of India (RBI) today made public a draft scheme of amalgamation of the family-controlled western Maharashtra-based bank with Federal Bank.

The RBI said Federal Bank had expressed interest in taking over GBK, including paying depositors and taking over its employees.

The draft scheme of merger has been sent to both banks and they are required to consider the proposal by January 21. The draft scheme has also been put up for suggestions from the public. GBK was placed under moratorium on Saturday.

The Aluva-based Federal Bank is looking to enhance its national presence by taking over this private bank.

Federal Bank Chairman M Venugopalan said, "Though Ganesh is a small bank, it will give us the opportunity to improve our agriculture portfolio. At present, we have only 20 branches in Maharashtra. With this proposed merger we could add 32 branches."

Venugopalan said GBK capitalisation could be for as low Rs 30 crore, which can be funded from its Rs 657 crore of reserves. He also added that the bank was open to acquiring more banks with the right combination of price and synergy.

"I won't be satisfied with GBK. I am open to other banks which provide a good opportunity for takeover," Venugopalan said.

GBK's networth had turned negative to Rs 3.05 crore. The bank was also unable to come up with any credible plan to raise fresh capital, RBI said in a statement. One single family holds over 30 per cent of the total shareholding of the bank. 

 

THE AMALGAMATION STORY THUS FAR
Year	Bank	Merged with
1969	Bank of Behar	State Bank of India
1970	National Bank of Lahore	State Bank of India
1971	Eastern Bank Ltd	Chartered Bank
1974	Krishnaram Baldeo Bank Ltd	State Bank of India
1976	Belgaum Bank Ltd	Union Bank
1984-85	Lakshmi Commercial Bank	Canara Bank
1984-85	Bank of Cochin	State Bank of India
1985	Miraj State Bank	Union Bank
1986	Hindustan Commercial Bank	Punjab National Bank
1988	Traders' Bank Ltd	Bank of Baroda
1989-90	United Industrial Bank	Allahabad Bank
1989-90	Bank of Tamilnad	Indian Overseas Bank
1989-90	Bank of Thanjavur	Indian Bank
1989-90	Parur Central Bank	Bank of India
1990-91	Purbanchal Bank	Central Bank of India
1993-94	New Bank of India	Punjab National Bank
1993-94	Bank of Karad	Bank of India
1995-96	Kasinath Seth Bank	State Bank of India
1997	Bari Doab Bank	Oriental Bank
1997	Punjab Coop Bank	Oriental Bank
1999	Bareilly Corp Bank	Bank of Baroda
1999	Sikkim Bank Ltd	Union Bank
2002	Benaras State Bank	Bank of Baroda
2003	Nedungade Bank	Punjab National Bank
2004	South Gujarat Local Area Bank	Bank of Baorad
2004	Global Trust Bank	Oriental Bank
2006	Ganesh Bank of Kurundwad	Federal Bank

According to Indian Bank's Association (IBA) data, the ailing bank's total income for 2004-05 declined to Rs 17.43 crore from Rs 22.89 crore in 2003-04.

The private sector bank's asset base was Rs 233.48 crore at the end of March 2005 (Rs 222.14 crore at the end of March 2004). Its gross NPAs stood at Rs 19.06 crore (Rs 18.21 crore), according to IBA data.

Earlier, Federal Bank was on the verge of taking over Lord Krishna Bank (LKB) but the deal fell through on valuation differences of LKB.

Federal Bank has about 400 branches, mostly in Kerala. The bank has also been planning to raise Rs 450 crore through a global depository offering to fund more acquisitions, Venugopalan said.

The Federal Bank scrip was down 0.75 per cent to close at Rs 185.05 on the Bombay Stock Exchange today even as the Sensex slipped 56.84 points.