Federal Bank unions move 'to thwart ICICI Bank'

The forthcoming annual general meeting of Federal Bank scheduled to be held on September 27 is expected to be stormy as various employee organisations of the bank are planning to mount pressure against what they allege is ICICI Bank's move to take full control of the bank.

The organisations have adopted a three-pronged strategy to prevent ICICI Bank from taking over control in the bank. According to V K Prasad, general secretary of the officers' association of the bank, it has been decided to mobilise maximum number of shareholders for the AGM and to have maximum number of proxies to vote out the resolutions moved by ICICI Bank. ICICI Bank has 20.44 per cent stake in the bank.

Another move from the associations is to mobilise mass support for retaining Federal Bank with its regional flavour as the move is against the interests of the state. Federal Bank has a credit deposit ratio of 65 per cent, the highest in the state.

The main thrust of the campaign is to address the issue of the challenges faced by Kerala-based banks especially after the merger of Nedungadi Bank with Punjab National Bank.

Leaders of the bank employees organisations told Business Standard that all the five Kerala-based banks "" Federal Bank, South Indian Bank, Lord Krishna Bank, Catholic Syrian Bank and Dhanalakshmi Bank"" are on the verge of being taken over by other banks or business houses.

The control of Lord Krishna Bank and Dhanalakshmi Bank has already gone to business groups outside Kerala and now it is the turn of Federal Bank, they said.

ICICI Bank will move a resolution at the AGM to split the chairman's post into a full time managing director and an executive chairman. The board of director of the bank has nominated KS Harshan, a former ICICI Bank executive and now with Bank of California, for the post of MD. ICICI Bank has only one member on the board.

The move to appoint Harshan was adopted with a dissenting note by the bank's chairman KP Padmakumar. Apart from the ICICI Bank nominee, five members supported the move.

Present chairman Padmakumar's term is coming to an end by the year end. The existing ICICI nominee is also being replaced by P H Ravikumar, a former ICICI Bank executive and now head of the bank's commodity exchange. He will join the board after the AGM.

The organisations have also decided to challenge the decisions of the board and AGM at the court in order to buy more time to build up mass support to their initiative.

ICICI Bank, meanwhile, held discussions with various institutions to sell its shares as it could hold only 5 per cent of the total shares following the new RBI regulations which are likely to come into force. Former ICICI, which got merged with the bank, had bought these shares way back in 1993.