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Why is Chanrichawla reducing his stake in the bank and selling shares to Yusuffali?
Sura Chanrichawla currently holds 18 per cent in the bank. According to the Reserve Bank of India's (RBI) mandate, he has to reduce his stake to 10 per cent. Hence, the transaction to sell five per cent stake to Yusuffali will help him to reduce his stake in the bank. It makes sense to sell the shares to Yusuffali. He is from Thrissur. He is also on the boards of a number of organisations in Kerala. It makes business sense for the bank.
How will the bank benefit from its association with Yusuffali?
He is a very well-known figure in West Asia. We will leverage on his relationships there to grow our non-resident deposit base. We will target the Indian community, especially South Indians, in that region. We will also market our home loan products to them. We will have scope to open our ATMs in LuLu stores in India and improve our brand visibility in West Asia. We plan to apply for opening our first overseas representative office. It will be in Abu Dhabi.
At what price will Yusuffali buy the stake?
It is essentially between the shareholders and I am not aware of the exact details. Going by the present strength of the bank, the price range could be Rs 300-350 per share.
Has Rakesh Bhatia agreed to take charge as the new managing director?
Yes. We are offering him a salary in line with the market. But the difference in this case is he will invest in one per cent of the shares of the bank even before joining, to show his commitment. He may also have to invest further and buy another two per cent at book value just to show his commitment. This purchase would be over a period of time.
When will he join the bank?
The appointment is subject to RBI's approval. We are awaiting the same from the regulator.
Catholic Syrian Bank had postponed its initial public offering (IPO). Do you plan to revive your fund raising programme?
We had kept it on hold till a new managing director was appointed. We will raise around Rs 100 crore via a small rights issue by March 2013. After Rakesh Bhatia joins, we plan to raise Rs 150-200 crore through private placements before June 30. The IPO should happen towards the end of the year and we will probably raise another Rs 500 crore.
These will take care of our capital adequacy requirements and provide funds to finance our expansion. These are subject to deliberations by the board and approval from RBI.
