CBoP's public issue likely next year

Centurion Bank of Punjab's (CBoP) proposed public issue, via which it aims to raise over Rs 400 crore, is likely in early 2006-07, as it sees its capital adequacy reaching comfortable levels with the Rs 384 crore preferential allotment.

The bank is making preferential allotment of shares to India Value Fund, managed by GW Capital (Rs 134.75 crore), ChrysCapital III Llc (Rs 134.75 crore) and Citigroup Venture Capital (Rs 113.57 crore). It will seek shareholders nod for the preferential allotment and the proposed public offering later this month.

The infusion of additional capital from the preferential allotment will increase the bank's tier-I capital adequacy to about 15 per cent. It also has tier-II capital adequacy of another 2.5 per cent. The bank will have more than comfortable capital for the current financial year.

After the preferential allotment, the total foreign holding in the bank will increase to 67 per cent, said Anil Jaggia, CBoP chief operating officer, at a press conference called to announce the replacement of the Misys' Equation software package with Infosys' Finacle core banking, e-banking platforms.

CBoP was formed with the merger of Centurion Bank with Bank of Punjab, which used Finacle. The bank is yet to decide whether the public issue of shares will be in the domestic market or an ADS offering.

The additional capital is being raised to support organic and inorganic growth. The bank will not require fresh capital to meet Basel II norms. It is looking to maintain capital adequacy above 11-12 per cent at all times, Jaggia said.

Referring to branch network expansion plans, Jaggia said the bank submitted its annual branch rollout plan to the Reserve Bank of India last month and is likely to get approvals by the end of this month. At present, CBOP has 240 branches and extension counters and 386 ATMs.