The Hindu Business Line : `L&T stake will improve City Union Bank's image'

Kumbakonam headquartered City Union Bank perceives that the 9.99 per cent stake by industrial major L&T in the bank would create an image for the bank and help improve the bank's business.

`They may use our bank for placing deposits and other business dealings. It would be advantageous for both of us. We have been having a long-standing association with L&T and this connection has probably made them choose CUB for investment,' the CUB Chairman, Mr Balasubramaniam, told Business Line.

This investment is expected to enhance the bank's net worth by Rs 45 crore.

The bank already had a net worth close to Rs 320 crore and the Chairman is hoping that it would reach the Rs 400-crore mark by March.

`We have been growing at 30 per cent in the last year or so. Such new investment would help sustain the momentum,' he added.

While the bank's board has okayed the preferential allotment of 26.65 lakh shares to L&T at Rs 169 per share (including a premium of Rs 159), the recommendation has to be approved by the Reserve Bank of India.

Mr Balasubramaniam said an Extraordinary General Meeting would be convened by mid January.

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