The boards of Centurion Bank of Punjab (CBoP) and Lord Krishna Bank (LKB) will meet on Monday in New Delhi to work out the swap ratio for the merger of LKB with Rana-Talwar controlled Centurion Bank of Punjab. According to market sources, the swap ratio is likely to be in the range of 1:1.3 to 1: 1.5. This means the merger may provide a shareholder 1.3 or 1.5 shares of Centurion Bank of Punjab for one share of Lord Krishna. The valuation is based on the book value of the banks and future potential of the merger arising out of the synergy of two banks. Ambit Corporate Finance and DSP Merrill Lynch are the investment bankers of CBoP and Lord Krishna Bank respectively for the transaction. N M Raiji & Co and Deloitte Haskins & Sells are the independent valuers to determine the share swap ratio. The CBoP board will consider valuation report of the independent valuers and the draft scheme of Amalgamation. It will also vet the proposals from prospective investors for a preferential issue of up to 17 crore shares of Re one each at a price to be determined according to SEBI norms. The merger will be provide CBoP a branch network to expand in Southern India.The LKB, an unlisted private bank, is likely to be valued at Rs 300- 350 crore, which was the price Federal bank was willing to pay when it was in talks for merger last year. The LKB-Federal deal fell through as the promoters reportedly insisted on a valuation of around Rs 450 crore.Towards the end of March 2006, LKB had a deposit base of Rs 2,279 crore, net profit of just Rs 4 crore and its net non-performing assets stood at 1.18%.
