Centurion to rejig balance sheet

Accumulated and goodwill losses to be written off against securities premium account.

Centurion Bank of Punjab (CBP) has proposed financial restructuring for writing off brought forward losses and goodwill created subsequent to the amalgamation of Bank of Punjab.

The operational losses brought forward were Rs 82.90 crore and loss on goodwill account was of Rs 58.88 crore as on October 1, 2005, and both will be written off against balance of the securities premium account, which stood at Rs 489.22 crore as on October 1, 2005.

In a notice to the shareholders for an extraordinary general meeting, CBP said its board of directors will undertake financial restructuring to bring the balance sheet to the right size.

It added the board has resolved that an amount not exceeding Rs 200 crore, in aggregate, should be adjusted out of the securities premium account for writing off the debit balance in the profit and loss account and balance in the goodwill account.

CBP said its balance sheet as on March 31, 2006 will incorporate the write-offs upon sanction from the Panaji bench of the Bombay High Court and approvals from other statutory authorities.

The bank said its capital is not adequately represented by the assets because of the losses brought forward and also the improvements in the overall performance are not mirrored accurately. It said the proposed financial restructuring is expected to reflect the true shareholder value by appropriately reflecting future profitability from operations.

Further, the right sizing of the balance sheet would result in a more realistic determination of certain key financial ratios such a Return on Capital Employed and Return on Net Worth.

There would be no major impact on the book value of CBP's shares as the goodwill and the negative balances in the profit and loss account are deducted from the net worth while computing the book value, for all practical purposes. 

CLEANING UP
P&L Account (In Rs crore)	Centurion Bank of Punjab	Centurion Bank
	Apr-Sep 2005	2004-05	2003-04
Total Income	243.89	410.55	396.77
Total expenditure	216.82	387.39	384.64
Net Profit/(Loss)	20.9	25.11	-112.95