It's a $1.3-billion question for foreign banks looking to corner a 49 per cent stake in listed Indian private banks. In rupee terms, they require around Rs 6,500 crore as the 20 private banks listed on the Bombay Stock Exchange and the National Stock Exchange have an aggregate market capitalisation of Rs 12,955 crore, as on February 15, 2001.
This is peanuts for big global banks that have waited all this while to set up base in India but were daunted by the endless maze of rules and regulations. As many as 11 listed banks have equity capital between Rs 6 crore and 49 crore. It will cost only Rs 791 crore to take a 49 per cent stake in these banks. The current market cap of these banks, as on February 15, stands at Rs 1,614 crore.
Then, there are a clutch of old private banks which are like sitting ducks -- they are starved of capital, and the Reserve Bank is breathing down their necks to get them to raise their capital base to Rs 100 crore. These banks need money to invest in building the right technology platform too.
Some of the foreign banks have already drafted their blue-prints for acquisitions. "The guiding factor is the regional presence of some of these banks. The foreign players are looking at customer base, branch network and regional presence to identify the right targets," said a merchant banking source.
Among the new banks, Centurion Bank, Global Trust and Bank of Punjab are the likely targets, sources said.
Karur Vysya Bank, with a modest capital of Rs 6 crore, is an easy target among private banks. Karur, with the current market cap of Rs 199 crore, is available at Rs 100 crore. The bank's capital adequacy ratio is, however, comfortable at 15.56 per cent as on March 31, 2001.
The cheapest among all Indian private banks is Dhanlakshmi Bank, which is available at a throw-away price of Rs 13 crore, if one goes by its current market cap of Rs 27 crore. Second in the line is Nedungadi Bank which can be targeted by investing Rs 20.54 crore. Lakshmi Vilas Bank can be pocketed for Rs 28.26 crore, United Western Bank for 31.86 crore, City Union Bank for 27.28 crore and Federal Bank for 73.44 crore.
Though, these banks all have equity below Rs 100 crore, they have capital adequacy ratios ranging between 6 per cent and 17.44 per cent. Jammu & Kashmir Bank, which has a capital adequacy ratio of 17.44 per cent, is available for Rs 165.39 crore.
