C. J. Punnathara
Kochi, Oct. 5
THE board of directors of Federal Bank, which met in Mumbai on Wednesday, has decided to evaluate and initiate the merger of Lord Krishna Bank with itself. The decision will be subject to the approval of the shareholders and the authorities concerned.
The board of directors of Lord Krishna Bank also met in Mumbai and approved in principle the merger with Federal Bank. "The merger will be initiated after due diligence of each other and subject to the approval of the Reserve Bank of India," Mr V. K. Gupta, Deputy Managing Director of Lord Krishna Bank said. All the members were present at the board meeting and the decision on the merger with Federal Bank was unanimous.
Federal Bank also informed the Bombay Stock Exchange that the board had in principle agreed to consider the merger of Lord Krishna Bank with itself, subject to financial and legal due diligence, and regulatory and other approvals for arriving at an acceptable valuation.
The bank added that it had constituted a committee to take necessary steps for conducting due diligence, arriving at a valuation, and evaluating the payment proposals for the merger and placing these before the board for its consideration.
Federal Bank will be appointing an external agency to carry out the due diligence as well as an internal evaluation of Lord Krishna Bank, sources at the board said. The process of doing due diligence and valuation will be initiated shortly and the report will be submitted to the board. The share swap ratio will be decided after the due diligence and valuation of both the banks are completed.
The board decided to take a final view on the structure and process of such a merger if the outcome of the due diligence, valuation and other related studies are found acceptable to both the banks and subject to other necessary approvals, Federal Bank said in a statement issued here.
Both Federal Bank and Lord Krishna Bank have a very strong presence in Kerala and are household names in the South. The proposed merger is expected to combine the strength of the banks for the benefit of the customers and other stakeholders, the statement said.
Federal Bank has a network of 456 branches covering almost all the important cities in the country, with 339 branches in Kerala. Lord Krishna Bank has a branch network of 112 spread across 11 States and the union territory of Chandigarh.
Federal Bank is in the process of consolidation and growth. The bank plans to rapidly grow and build on the very strong presence in Kerala, the sources said.