Lord Krishna Bank to give Centurion southern comfort

The Rana Talwar-controlled Centurion Bank of Punjab (CBoP) has bared its acquisitive intent to become a retail bank with presence across the country's top 100 cities.

It is acquiring Kerala-based Lord Krishna Bank (LKB) within months of taking over Bank of Punjab (BoP), which is dominant in the north.

For Mohan Puri, promoter of LKB, the deal with CBoP comes as a relief after the failed attempt for merger with Federal Bank, also Kerala-based, in late 2005.

Puri, a Delhi-based businessman, has been under pressure to pare his stake below 10 per cent, in accordance with the Reserve Bank of India's (RBI) guidelines on ownership in private sector banks.

But the proposed merger of LKB with CBoP won't fetch Puri a price that he was expecting almost a year ago despite an improvement in the bank's financial since then.

LKB is likely to be valued at around Rs 300 crore, the price which Federal Bank was willing to pay. LKB-Federal deal fell through as Puri insisted on a valuation of around Rs 450 crore. "A valuation of around Rs 300 crore would be very good," a merchant banker said.

The boards of both the banks would meet on September 4, 2006, to consider a detailed merger proposal after the managements of the two banks sort out the finer points of the merger. The managements have received an in-principle nod to go ahead and finalise the the merger.

The Reserve Bank of India (RBI) was sounded on the proposed merger before the boards of the two banks met last Saturday to accord in-principle approvals.