Centurion Bank plans tier-II float

Centurion Bank would be enhancing its capital base by Rs 50 crore through a Tier-II capital raising exercise to Rs 200 crore soon.

The bank has also firmed up plans of offering equity-related services to its clients through its existing network. It has entered into talks with few national broking houses for rolling out the service, to be announced in the next couple of months.

The bank's capital adequacy, as of September 2004, stands at 9.51 per cent which along with the recently concluded rights issue and a Tier-II capital enhancement exercise would enhance it to 11 per cent.

Harpreet Singh, head branch banking and wealth management services while announcing a tie-up with Bajaj Allianz Life Insurance in Kolkata today said, "We will raise Tier-II this year. The bank is waiting for the opportune time to raise the capital, but it will be raised this year itself. Centurion has room for Rs 50 crore of Tier-II and given our business targets we would like to exhaust it."

Centurion raised a total capital of Rs 288 crore initially when its financial restructuring was on.

This was, however, adjusted with its high NPA and large write-offs on account of bad assets. The adjusted capital stood at Rs 56 crore. The bank raised additional Rs 91 crore through a rights issue and is now looking at Tier-II.

On what would be the additional capital requirement with regards to Basel-II operational risk and market risk "" Singh said, "We are at present carrying out the exercise and would NPA at the bank has also declined from 48 per cent last year to 3.4 per cent and its cost of fund has also declined from 6.96 to 6.46 per cent in the first half of the current fiscal.

Meanwhile, it has also entered into talks with Bajaj Allianz general insurance for a bancassurance tie-up for non-life insurance products.

On equity broking, Singh said, "Equity broking services would be made available to our clients through our branches and we at this point are not looking at floating separate company."

Singh also said that it would soon offer investment advisory services to its clients. "We will keep track of an array of financial instruments, irrespective of the fact that we deal in them or not, to provide them a complete package."