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Centurion Bank up on merger news

June 17, 2003 12:29 IST

Centurion Bank was witness to solid gains today as reports surfaced that the bank's shareholders have approved the merger with Bank of Muscat.

The stock of private sector bank jumped 4.19% to Rs 11.68 on BSE by 10:50 IST, as a result. Volumes of 77,460 shares were recorded on the counter by then. The stock has now grown 96.3% from Rs 5.95 (a 52-week low) on 22 October 2002.

Centurion Bank (CBL) is witnessing a rally now on reports that the shareholders of the bank have approved the scheme of arrangement between Bank of Muscat and Centurion Bank. Centurion Bank's shareholders have also granted their assent to the restructuring proposal of the bank at a Bombay High Court (Goa bench) convened meeting on 14 June 2003 at Goa.

The shareholders have, in addition, granted their okay to the reduction in the bank's paid-up capital and consequent amendments to the Memorandum of Association (MoA) and Articles of Association (AoA).

The issued, subscribed and paid-up capital of the bank will be reduced from Rs 152.47 crore to Rs 15.247 crore with a face value of Re 1 per share. The reduction shall be effected by cancelling Rs 9 per equity share.

The bank had filed the scheme of restructuring and infusion of fresh capital on the basis of the proposal submitted by Sabre Capital Worldwide Inc before the Goa bench of the Mumbai High Court.

Earlier, Bank of Muscat had confirmed an investment of Rs 75 crore in Centurion Bank, which would give the former 26% stake . Bank of Muscat will also merge its Bangalore branch operations with Centurion Bank.

Reports suggest that Bank of Muscat will have three representatives on the board of Centurion Bank, while the Sabre Group will have three representations, including Rana Talwar as the chairman of the bank.

Sabre Capital and Bank of Muscat, along with a few other investors, have plans to pick up a controlling stake in CBL and also make a capital infusion through a rights / public issue of equity shares. The infusion of Rs 319 crore is likely to be made in two phases. The infusion of funds is likely to take the bank's capital adequacy ratio (CAR) to 10%.

The bank's CAR for the first quarter of 2002-03 was at 4.05% as against the Reserve Bank of India's (RBI) stipulated 9%.

CBL is reducing a part of its capital as part of the restructuring process. Reports suggest that the recast package has already got the RBI's in-principle approval.

The 26% equity stake pledged by CBL promoter Dev Ahuja's 20th Century Finance Corporation to settle his obligations to the bank is likely to be sold by CBL in due course of time.

But the shareholding pattern after the first phase of capital restructuring will be as follows : Dev Ahuja's holding would come down from 26% to 5.5%, Keppel Tatlee Bank, Asian Development Bank and International Finance Corporation's holding would come down to 16% from 36.5%, while Sabre will hold 48%. Public holding will also come down from the current 37.5% to 30.5%.

Incorporated in June 1994, CBL was promoted by the erstwhile 20th Century Finance Corporation (TCFC) and associates in association with Keppel Tatlee Bank (which was earlier Keppel Bank of Singapore). CBL's focus so far has been on growth-oriented, higher end, medium-sized and emerging blue-chip companies in the corporate sector through a variety of products and services.

It also has a keen interest in the retail sector. The bank is also into international businesses encompassing both fund-based and non-fund based assistance to corporate and institutional clients.

CBL provides various services like ATMs at all its branches, computer terminals at selected customers' premises, facility of operating account from any of the bank's branches, instant transfer of funds, speedy collection of financial instruments, etc.

It is being positioned as a professionally managed bank with presence in all major financial and growth centres. The bank plans to increase its focus on retail customers and raise the portfolio of retail assets to 50% from the current 35%.

CBL has 57 branches, 17 extension counters, 135 ATM's and a strong retail base of around 5 lakh customers.

For the third quarter ended 31 December 2002, CBL recorded a net profit of Rs 3.10 crore compared to a net loss of Rs 26.04 crore in the corresponding period of the previous year. Total income declined by 5% to Rs 124.23 crore from Rs 130.74 crore in DQ 2001.


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