Centurion capital rejig gets RBI nod

The Reserve Bank of India (RBI) gave final approval to the capital restructuring plan of Centurion Bank.

The face value of the bank's share will now be bought down to Re 1 from Rs 10 "" by cancelling Rs 9 from the existing face value.

The record date will be announced in the next one or two days and should be around the first week of February. The existing paid up capital of the bank will be reduced from Rs 152.47 crore to Rs 15.24 crore.

BankMuscat and Sabre Capital, promoted by former Standard Chartered chief executive officer Rana Talwar and other investors will pump in Rs 154 crore into the bank before the record date.

On the appointed date the bank will issue new shares to these investors.

There will also be a rights issue of Rs 65 crore before March 31. The paid up capital of the bank post the rights issue would be at Rs 72.87 crore.

A combined balance will be made on the record date for the purpose of the rights issue as this would reflect the capital infusion into the bank.

Says Centurion Bank's chairman and managing director V Janakiraman, "We have received the final RBI approval. The new investors will bring in capital into the bank before February 15."

The bank board is meeting on January 31.

Shailendra Bhandari, managing director of Prudential-ICICI Asset Management Co, will take over as the managing director of the bank by the end of this month.

Rana Talwar will take over as the chairman of the bank. Centurion will be used by Sabre for any move by it including takeovers in the financial services arena.

Post capital infusion of Rs 154 crore in the first phase, BankMuscat's stake will be at 33 per cent, existing investors such as Asian Development Bank, Singapore's Keppel and the Washington-based International Finance Corporation will hold 11 per cent, while Sabre Capital will have 5 per cent.

Keppel will bring its contribution into the bank both through foreign direct investment and the foreign institutional investor route.

The total foreign institutional investor stake in the bank will be at 18 per cent.

Post the rights issue, BankMuscat's stake in the bank will fall down to 26 per cent, while Sabre's stake will go up to 7 per cent and Keppel and the others will be 11 per cent. BankMuscat's stake will reduce as it will only partially subscribe to the rights issue.

The bank is waiting for the final notification on the new capital norms in private sector banks.

Investors such as Singapore's Keppel would then come in through the foreign direct investment route than the foreign institutional investor route.