Federal to raise Rs 750 crore, scouts for an acquisition

Federal Bank aims to raise Rs 600 crore to Rs 750 crore in next fiscal through a combination of a public issue and a rights issue. The bank is also scouting for a suitable acquisition.

Addressing mediapersons in Chennai, P R Sankaranarayanan, executive director, Federal Bank, said that bank was looking at aggressive growth both organically and inorganically. The proposed equity issue is meant to fund its growth plans.

S Santhanakrishnan, director, Federal Bank, said that the bank was in talks with two other banks for a takeover. However, he declined to disclose information on the target banks

The bank has also drawn up a report on operational risk that would be in sync with the Basel II norms. A team has been working on factors which the bank will have to focus on.

Since the board of directors has not yet considered it, it would be premature to disclose details, said Santhanakrishnan.

M Venugopal, chairman of Bank of India is likely to take over as the new chairman of Federal Bank on May 2, 2005, said Santhanakrishnan.

The bank has budgeted about Rs 50 crore on core banking initiative which is expected to be implemented in 150 branches by March 31, 2006. Sankaranarayanan said that software major Wipro had undertaken a study to implement the solution.

The net NPAs has been reduced to 1.96 per cent for the third quarter in 2004-05 compared to 3.97 per cent for the same period last year. In value terms, net NPAs had fallen to Rs 162.70 crore from Rs 276.76 crore.

The capital adequacy ratio of the bank improved to 12.01 per cent in December 31, 2004 from 11.48 per cent in March 31, 2004.

The bank's total business stood at Rs 21,173 crore as on December 31, 2004 registering a year on year growth of 10.67 per cent.

Non resident Indian deposits are about 35 per cent of deposits accounting to Rs 4,525 crore. Taxation of the NRI deposits has been of major concern for stagnation of these deposits, he added.