Centurion Bank of Punjab, Lord Krishna bank merge at Rs 330 cr

New Delhi, Sep 4 (UNI) Centurion Bank of Punjab Ltd and Lord Krishna Bank today approved their merger pegged at around Rs 330 crore, with a share swap ratio fixed at 7:5.

The merged entity will be called Centurion Bank of Punjab. After the merger, 70 per cent of the advances will be targetted at retail and Small and Medium Enterprise lending, while the capital adequacy ratio is pegged at 12 per cent.

In addition, the Board of Directors of Centurion Bank of Punjab also approved a proposal to raise additional capital through a preferential issue of fresh equity of upto 17 crore new shares.

Upto 7.5 crore would be raised through fully paid up equity shares at a price of Rs 24.54 per share for a consideration of upto Rs 184 crore to India Advantage Fund, acting through its investment manager ICICI Ventures Funds, while upto 9.5 crore will be raised through fully paid up equity shares at a price not exceeding Rs 25 per share for a consideration of upto Rs 237 crore from the Bank of Muscat.

''The proposed merger with Lord Krishna Bank firmly establishes our role as an industry consolidator. The merger of the Bank of Punjab with the erstwhile Centurion Bank has been an unqualified success and we are confident that the proposed merger will accelerate the bank's growth momentum,'' Centurion Bank of Punjab Chairman Rana Talwar told reporters here.

As part of the integration of both banks, it is being envisaged that there will be no retrenchment of staff of either bank and there will be no closure of any rural branches. Additionally, the scheme of amalgamation provides for a one-time increment to all the existing employees of Lord Krishna Bank, he added.

''The merger is in the best interests of all the stake holders.

Centurion Bank of Punjab is fully committed to look after employees interest,'' Lord Krishna Bank Director Mohan Puri said.

Both banks will seek approvals for the merger from their respective shareholders during the EGM on September 30.

The combined entity would have a nationwide network of 361 branches and 12 extension counters, with an extensive and in-depth coverage in Kerala and Punjab. Centurion Bank of Punjab also has approvals from the Reserve Bank of India to open another 30 branches in the current fiscal year.

The deposit base of Centurion Bank of Punjab as of June 30, 2006 was Rs 10372.1 crore and that of Lord Krishna Bank as on March 31, 2006 was Rs 2278.9 crore. Net advances of Centurion Bank of Punjab as on June 30, 2006, were Rs 7452.4 crore and those for Lord Krishna Bank as on March 31, 2006 were Rs 1420,9 crore.

The balance sheet size of Centurion Bank of Punjab as on June 30, 2006 was Rs 12480,9 crore and as on March 31, 2006, Lord Krishna Bank had a balance sheet size of Rs 2599,3 crore.

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