The merger of Catholic Syrian Bank with Federal Bank is expected to be through in a month.
According to reliable sources close to the deal, the boards of directors of both the banks will meet in a month’s time to give their consent. The acquisition price will be fixed then.
Shareholding pattern
Federal Bank has 4.99 per cent stake in the privately-held Catholic Syrian Bank. The other largest shareholder in CSB is Thailand-based NRI, Mr Surachan Chawla, with a 21 per cent stake.
After the Reserve Bank of India’s mandate to bring down his stake to 10 per cent, Mr Chawla reduced his exposure to 21 per cent in 2008 from 34 per cent in 1994. Mr Chawla has also agreed to sell his stake to Federal Bank, but the value is not known.
Mr S. Santhakrishnan, a chartered accountant who has been a member of the Federal Bank’s board for long, quit five months ago to join the CSB board.
‘Good fit’
On why Federal Bank was interested in Catholic Syrian Bank, another Kerala-based bank, sources in the bank said it was a ‘good fit’.
The merger move was contemplated to stave off the possibility of a bigger bank acquiring Cathoilc Syrian Bank and posing a business threat.
Although in terms of total business at Rs 54,590 crore Federal Bank could be considered relatively small, in terms of net worth (Rs 4,325 crore) it is the fourth largest private bank after ICICI Bank, HDFC Bank and Axis Bank.
The bank has been focusing on the three southern States of Tamil Nadu, Andhra Pradesh and Karnataka for growing its advances, deposits and branch network. Almost 54 per cent of advances and half of its deposits are from outside Kerala.
Federal Bank share price closed at Rs 251.10 on Tuesday.
Source: The Hindu Businessline