Replaces three directors who were not in favour of the deal.
Shareholders of Catholic Syrian Bank, or CSB, today paved the way for its merger with Federal Bank by replacing three directors who were not in favour of the deal that has been in the pipeline for several months.
At CSB’s annual general meeting, the shareholders elected T S Anantharaman, K Iype Peter and Sumeer Bhasin as directors. They replace K A Menon, George Sebastian and George Chemmanur, who were said to be opposed to the Thrissur-based bank’s merger with Federal Bank.
| FINANCIAL AND BUSINESS PROFILE | ||
| CSB | Federal Bank | |
| Total Income | Rs 656.19 cr | Rs 3,831.3 cr |
| Net profit | Rs 37.18 cr | Rs 500.49 cr |
| Advances | Rs 3,683.8 cr | Rs 22,391.8 cr |
| Deposits | Rs 6,332.8 cr | Rs 32,198.1 cr |
| Gross NPA in % | 4.60% | 2.57% |
| Branches | 363 | 612 |
| The information is for the year ended March 2009 CSB - Catholic Syrian Bank Source: bank website. Fitch report | ||
The move is being seen as a go-ahead from the shareholders for the merger, which was also opposed by the Church. Sources close to the development said Thrissur Arch Diocese of the Catholic Church was unlikely to oppose the move now. Earlier, the Church was opposed to the move on the ground that the regional identity of CSB would be lost.
Surachan Chansri Chawla, a Bangkok-based businessman, who held 23 per cent stake in CSB, was also in favour of the merger, which had originally started as a 5 per cent stake acquisition by Federal Bank.
The merger is expected to take place as soon as due diligence is complete and the Reserve Bank of India approves the proposal. At the time of the initial stake acquisition, Federal Bank had discussed the possibility of merger with RBI, sources said.
A senior Federal Bank executive told Business Standard it was too early to say whether today’s development was a step towards integration. “But the benefits of such integration, as and when it happens, are clear. Federal Bank will benefit from scale and the resultant increase in penetration,” he said.
A merger would help Federal Bank become the largest old-generation private bank in India. The bank had earlier taken over Ganesh Bank of Kurundwad. CSB has 363 branches across the country, of which 240 are in Kerala. In 2008-09 the bank had total business of over Rs 10,000 crore and net profit of Rs 37.19 crore. The financial results of the first quarter of 2009-10 are yet to be announced.
Federal Bank has reported a net profit of Rs 136.38 crore during the first quarter of the current financial year, as against Rs 68.15 crore during the corresponding period last year, representing growth of 100.12 per cent. The bank’s business reached Rs.55,012 crore.
The CSB-Federal Bank merger would be the first consolidation in the banking space during the current financial year. Last year, Centurion Bank of Punjab was merged with HDFC Bank, while State Bank of Saurashtra merged with its parent State Bank of India. The country’s largest bank, SBI, is in the process of merging another associate bank, State Bank of Indore, with itself and has sought approval from the government, its largest shareholder.
