The Hindu Business Line : Bank of Punjab, Centurion merger ratio fixed at 4:9 — New entity to be called Centurion Bank of Punjab

(From left) Mr Shailendra Bhandari, Managing Director, Centurion Bank, Mr Tejbir Singh, Executive Director, Bank of Punjab, Mr Rana Talwar, Chairman, Centurion Bank, and Mr C. K. Sharma, CEO, Bank of Punjab, at a press conference in the Capital on Wednesday. — Kamal Narang

New Delhi , June 29

THE board of directors of Centurion Bank Ltd and Bank of Punjab Ltd on Wednesday approved the merger of the two banks. The combined entity would be known as Centurion Bank of Punjab.

Announcing the share-swap ratio, Mr Rana Talwar, Chairman, Centurion Bank, said that the ratio has been fixed at 4: 9, that is, for every four shares of Bank of Punjab, its shareholders would receive nine shares of Centurion Bank. KPMG India Pvt Ltd and NM Raiji & Co are the independent valuers and Ambit Corporate Finance was the sole investment banker to the transaction. "The merger is a win-win for the shareholders, customers and staff of the two banks. The reason for the merger is the fantastic fit in terms of achieving scale and geographical presence. After the regulatory approvals, there would be crossover of products and services," Mr Talwar said.

He also made it clear that there was no plan to downsize the bank after the regulators approved the merger. "There is no question of downsizing. We are talking about growth. There might be synergies in the functioning of the banks and therefore, some redeployment may be there," he said.

While Bank of Punjab had 1,900 persons on its rolls, the number of employees of Centurion Bank now stands at 1,300. The combined entity would have a net worth of Rs 696 crore as per the proforma figures as on March 31, 2005. The capital adequacy ratio of the combined entity would be 16.1 per cent. "It would be an extremely well capitalised bank," Mr Talwar said.

Both the banks have called extraordinary general meetings of their respective shareholders on August 3. After obtaining the shareholders nod, the two banks would approach the Reserve Bank of India for the approval of the merger scheme.

Once the merger process is completed, Bank of Muscat's shareholding in the combined bank would stand at 25 per cent (31 per cent in Centurion). Similarly, in the case of Keppel Corp, the shareholding in the combined bank would stand at 11 per cent (13.4 per cent in Centurion prior to the merger).

Commenting on the merger, Mr Tejbir Singh, Executive Director, Bank of Punjab, said that the combined bank would produce "electrifying results" and represented a perfect fit.

Meanwhile, Bank of Punjab on Wednesday reported a net loss of Rs 61 crore for the year ended March 31, 2005, against a net profit of Rs 37 crore in the previous year.

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