South Indian Bank issue price fixed at Rs 60 to Rs 66

The price band of the forthcoming public issue of South Indian Bank has been fixed between Rs 60 and Rs 66. Addressing a press conference V A Joseph, chairman and CEO, South Indian Bank, said that the bank's public issue would be equity shares of Rs 10 each to raise Rs 150 crore. The issue will open from February 10 to 15.

The issue comprises Rs 15 crore reserved for allocation to eligible employees and Rs 15 crore reserved for existing retail shareholders, leaving a net offer of Rs 120 crore to the public. Up to Rs 60 crore will be allocated to qualified institutional buyers of the Rs 120 crore allotted to the public.

"Non-institutional portion would be at least Rs 18 crore, leaving a retail portion of Rs 42 crore. The objective of the issue would be to augment the capital base to meet the future capital requirement arising out of the implementation of the Basel II standards and the growth in our assets. Primarily our loan and investment portfolio due to growth of the Indian economy and for other general purposes," he added.

As on September 30, 2005, the contingent liabilities amounted to Rs 1,071.9 crore for which the bank has not provided. Contingent liabilities arising out of the ordinary course of business include liability on account of outstanding forward exchange contracts of Rs 635.4 crore, guarantees given on behalf of customers of Rs 179.6 crore and acceptances, endorsements and other obligations of Rs 238.8 crore.

In addition, the bank has contingent liabilities on account of claims against it not acknowledged as debts of Rs 16.5 crore and un-expired capital commitments of Rs 1.4 crore.

If these contingent liabilities materialise fully or partly, the financial condition and results of operations could be affected.

Stakes in Bharat Overseas Bank

The board of directors of South Indian Bank has given its approval to sell its 10 per cent stake in Bharat Overseas Bank to Indian Overseas Bank (IOB).

The price of the stakes will be decided in tandem with the other banks that hold stakes in Bharat Overseas Bank. When asked about the sale of stakes in the Bharat Overseas Bank, chairman and CEO of South Indian Bank, V A Joseph said that due to the forthcoming public issue he would not be able to comment. The board of directors of IOB will hold a meeting on February 14, to consider buying the stakes of other six banks in Bharat Overseas Bank.

This process will see IOB, the majority shareholder of Bharat Overseas Bank, merge Bharat Overseas Bank with itself.