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Rediff News  All News  » Business » Federal Bank, CSB merger may get delayed

Federal Bank, CSB merger may get delayed

March 05, 2009 02:15 IST

The proposed merger of Federal Bank and Catholic Syrian Bank may be delayed, following the announcement of dates for general elections. All major political parties, especially the Congress, seem to be sympathising with the Thrissur Arch Diocese of the Catholic church, which is vehemently opposing the merger move.

Since the church has quite an influence in parliamentary constituencies such as Thrissur,  Chalakudy, all political parties are publicly supporting the anti-merger move organised by the Diocese. So, while the merger seems inevitable, it is likely to be delayed further by 6-7  months.

Meanwhile, the board of directors of CSB that had earlier given an in-principle nod to the merger, has constituted a four-member committee to negotiate with the church and others. According to banking experts, this is a tactical move initiated by Federal Bank to cool down the anti-merger agitations.   

The committee is said to be evolving a formula to drive away the apprehensions of the church. The church is also considering the possibility to buy shares from Surachan Chasri Chawla, a Bangkok-based Indian businessman and also the largest shareholder, to control a major chunk of the holding in CSB.

Chawla has around 22 per cent shares. He had already sold 5 per cent shares to Federal Bank and there is a mutual understanding between him and Federal Bank to sell the remaining shares.

Though the church is said to have offered a higher price to Chawla, his stand is so far not clear on the offer. The church is in talks with Chawla through CSB Protection Committee, which is organising the agitation against the merger. Fr Raphel Thattil, Vicar General of Thrissur Arch Diocese, said that the shares of Chawla should be sold to Thrissur-based shareholders in order to protect the identity of the bank.

The church's stand is very clear on the issue that CSB should continue as a Thrissur- based bank. Thattil told Business Standard that the church was ready to negotiate with Chawla over the rate of shares. We hope Chawla has not  completely rejected the proposal, he said.

Meanwhile, there are suspicions over the anti-merger move like from where the huge sum of money to buy the shares of Chawla will come. There are reports that some leading private sector banks and financial institutions are behind this move. Federal Bank is keen on taking over CSB.

George Joseph in Kochi