Regulatory approvals may be completed by year-end; no staff retrenchment
Amalgamation providesfor a one-time increment to all the existing employees of LKB.
Centurion Bankto raise additional capital through preferential issue of equity shares.
It alsoproposes to issue up to 9.5-crore equity shares at a price not exceeding Rs 25 per share for a consideration of up to Rs 237.5 crore to BankMuscat.
New Delhi, Sept. 4
The board of directors of Centurion Bank of Punjab Ltd (CBP) and Lord Krishna Bank Ltd (LKB) on Monday approved the merger of LKB with Centurion Bank.
The merger is subject to the Reserve Bank of India approval. The share swap ratio has been fixed at 5:7 i.e. for every 5 shares of LKB, its shareholders will receive 7 shares of Centurion Bank.
Mr Rana Talwar, Chairman, Centurion Bank, said the merger would benefit the stakeholders of both the banks. He expects the regulatory approvals for the merger to be completed by the year-end. After the merger, he said the merged entity would continue to be named as Centurion Bank of Punjab.
He also said at a press conference here that there would be no retrenchment of staff of either banks and there would be no closure of any rural branches. Mr Talwar said the scheme of amalgamation also provides for a one-time increment to all the existing employees of LKB.
While Centurion Bank would have an extraordinary general meeting of its shareholders on September 30, LKB would have its annual general meeting on the same day. Both banks would seek approvals for the merger from their respective shareholders at these meetings.
Mr Talwar also announced that the board, meeting on Monday, approved a proposal to raise additional capital through a preferential issue of fresh equity. The preferential issue is also subject to regulatory approvals.
As per the proposal, up to 7.5 crore fully paid-up equity shares (face value Re 1) at a price of Rs 24.54 per equity share would be issued to India Advantage Fund V, acting through its investment manager, ICICI Venture Funds Management Company Ltd. This would involve consideration of up to Rs 184 crore.
Centurion Bank also proposes to issue up to 9.5-crore equity shares at a price not exceeding Rs 25 per share for a consideration of up to Rs 237.5 crore to BankMuscat (SAOG).
Mr Talwar said the additional capital raised would enable the bank to maintain a strong capital position post merger and provide support and drive it requires to ensure accelerated growth over the coming quarters. On Monday, the equity shares of Centurion Bank (with face value Re 1) closed on the National Stock Exchange at Rs 25.60 per share, lower than the day's opening trade of Rs 26.30.