Federal Bank eyes merger with south-based bank

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.

i-flex to acquire Operational Risk Tool Suite (Ortos) from Capco

21st June 2005: India's i-flex solutions said today that it plans to acquire a risk management software product from consulting company Capco. It did not indicate the value of the transaction. The product is called Operational Risk Tool Suite (Ortos) and i-flex hopes that, combined with its own risk management product called Reveleus, financial institutions will be able to comply with Basel II faster. The Basel II norms have been agreed by global central bankers to determine the amount of capital banks must keep in reserve to cushion unforseen risks.

Centurion, Bank of Punjab (BoP) to consider merger

20th June 2005: Two private sector banks - Centurion Bank and Bank of Punjab (BoP) - are exploring the option of merging to form a larger financial sector entity. Both banks in notice to the Stock Exchange, Mumbai (BSE) said their boards are meeting on Monday separately to consider in-principle proposal for a possible merger between them. Centurion Bank, initially promoted by D Ahuja, saw changed in promotership after it went through financial troubles. Now, Sabre Capital led by Rana Talwar controls the bank.