21st June 2005: The fifth largest private sector bank, Federal Bank Ltd is eyeing a merger with an old private south-based bank. “We want to change our image from being strong in Kerala to being a south-based bank,” the bank’s chairman & CEO M Venugopalan said.
Federal Bank also proposes to raise about Rs 350-crore either by way of a public offering or a global depository receipt (GDR) latest by September end. The preference today is for a public issue in order to improve the liquidity of the bank shares in the domestic market.
Following the public issue/GDR, ICICI Bank’s 20% holding in Federal Bank will stand reduced to about 15%, said Venugopalan. “The fund-raising exercise will help meet our growth plans for the next two years,” said Venugopalan. The bank has targeted a growth rate of 30% in advances during the current year, against last year’s actual growth rate of 24%. The bank’s current capital adequacy ratio stands at 11%.
Speaking on the possibility of merger with a south-based bank, Venugopalan declined to name any specific bank, stating that talks have not taken place. However, he pointed to quite a few strong players in the south including Indian Bank, The Lakshmi Vilas Bank Ltd, Karnataka Bank, South Indian Bank and Lord Krishna Bank Ltd, and Dhanalakshmi Bank Ltd among others.