Tamilnad Mercantile Bank may go for listing

Coimbatore | Updated on May 09, 2011 Published on May 09, 2011

Mr A.K. Jagannathan.

After resolving shareholding, ownership issues: MD

Tuticorin-headquartered Tamilnad Mercantile Bank is looking to list its shares, possibly after resolving some of the issues around shareholding and ownership.

How soon these issues would be resolved, however, remains to be seen.

TMB's Managing Director and Chief Executive, Mr A.K. Jagannathan, said that the Reserve Bank wants the bank to list shares. TMB would consider a listing, he said.

He spoke to Business Line after the release of the annual results for 2010-11 at a conference in Tuticorin on Friday.

Mr Jagannathan was flanked by at least eight directors of the board.

On reports that the bank's shares were being traded at levels below its book value, he said: “The book value has risen to Rs 48,022 a share at present from Rs 40,364 a share last year; and the earnings per share as at end March 2011 stood at Rs 8,820 against Rs 6,487 last year. We are not concerned about the price at which investors buy the share so long as the papers are in order and the banking regulator okays the transfer.”

The bank has been in the limelight from the day investors outside the Nadar community started evincing interest by investing in its equity. There has been resistance from Nadars, who own a majority stake in TMB, even though reports suggest that there has been some change of heart towards investors from outside the community.

Mr Jagannathan conceded that there were issues relating to ownership of shares, but quickly pointed out that such issues did not impact the bank's performance in any way.

So is an IPO on the cards?

“We can manage without IPO funds at least for another three years. But the RBI wants us to get listed. Listing our shares through an IPO is possible but only after the pending issues are cleared,” Mr Jagannathan reiterated.

“In the meanwhile, should there be a need for funds, we can look at tier-II bonds. But this comes at a price.”

Answering another query, he said: “The share ownership dispute did not impact the working (operations) of the bank. Such ownership issues tend to arise in commercial undertakings.”

The bank's plans include, said the Managing Director, achieving the business volume target of Rs 31,650 crore, expanding network from 234 to 300 branches, entering bancassurance business for life (insurance products), retailing gold coins through tie-up and introducing mobile banking services during this fiscal.

On establishing TMB's presence overseas, Mr Jagannathan said: “We had a branch in Colombo as early as 1933, but this was closed because it proved to be a loss-making proposition. Now we are eyeing the possibility of opening a branch in Sri Lanka and one in Malaysia. However, these would have to wait till the RBI clears the (shareholding) issue. We want to ensure that we do things right, even if it meant waiting for some time before taking the plunge.”

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Published on May 09, 2011
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