Centurion Bank promoter Dev Ahuja has authorised the board to sell his entire 26.2 per cent stake in the bank held through TCFC Finance Ltd (TFL). TFL has asked the bank to sell the stake to a strategic investor, executive director V S Srinivasan said.
With this stake transfer, Ahuja's holding in Centurion Bank has dropped to around 8.5 per cent. TFL has also waived all rights to claim a refund in respect to future collections of specific assets for which the financial support agreement (FSA) was given, Srinivasan said.
TFL had initially pledged its 23.12 per cent stake in the bank, valued at Rs 36.14 crore face value, as part of the FSA.
20th Century Finance Corporation (TCFC), which had merged itself with the bank in 1998, had an agreement with TFL that the investment company would have a liability of maximum Rs 40 crore to make good the incremental provisioning on account of non-performing assets (NPAs). The cumulative provisioning till March 31, 2001 was of Rs 29.92 crore. The estimated provisioning this year would be around Rs 10.08 crore, thus bringing the total provisioning to Rs 40 crore, said Srinivasan.
In order to cover the additional provisioning, Ahuja bought in an additional 3.08 per cent through Century Finance & Consultancy Services Ltd.
The bank is coordinating along with IFC Washington in selling off the TFL stake. "The new partner should also be prepared to invest more money. The board is looking at a capital infusion of around Rs 120-180 crore," said Srinivasan.
The bank is currently in talks with three strategic investors to pick up the TFL stake. V Janakiraman is the new CMD in place of Ahuja who has stepped down as the chairman.
Meanwhile, the bank has posted a net loss of Rs 26.14 crore for the half year ended September 30, 2001 compared to a profit of Rs 21.43 crore in the corresponding period the previous year. The prime reason for the loss seems to be a sharp rise in provisioning to Rs 44 crore for the current half year compared to Rs 9 crore the previous year.
Of this Rs 13 crore has been accounted as bad loans in corporate and retail, Rs 24 crore through capital market exposure and Rs 7 crore due to diminution in value of equity investments.
