Mumbai, Dec. 4: Centurion Bank is in the final stages of having a foreign lineage pursuant to a fund infusion of Rs 219 crore. The infusion will see the combined holding of BankMuscat, Keppel Bank of Singapore and Sabre Capital at 44 per cent.
In a two-phase recapitalisation scheme, the first phase will see a fund infusion of Rs 154 crore from foreign direct investment (FDI), foreign institutional investors, domestic mutual funds and domestic investors. The FDI contribution will be up to an extent of 49 per cent. This will be followed by a rights issue of Rs 65 crore.
This marks yet another instance of successful consolidation within the domestic banking industry. On Tuesday, the sector had witnessed HSBC picking up over 14 per cent stake in UTI Bank.
Centurion Bank was earlier marred by huge losses and a capital adequacy ratio lower than that mandated by the central bank. However, a fresh fund infusion is slated to see the capital adequacy ratio rise above 10 per cent.
Sabre Capital Worldwide Inc officials, who were in the city today to witness the signing of shareholders’ agreement between BankMuscat (SAOG), Sabre and Keppel Corporation, said they have received an excellent response to the first phase with a commitment of funds in excess of Rs 154 crore.
“We have even received proposals for funding from some of the leading mutual funds in the country,” a Sabre official said.
While Centurion Bank has already obtained permission from the Bombay High Court and the Karnataka High Court for restructuring, infusion of fresh capital and the merger of the Bangalore branch of BankMuscat, a formal approval from the central bank is still awaited.
Sabre Capital chairman Rana Talwar said after the first phase, BankMuscat would be the single largest shareholder having a stake of 33 per cent.
However, the bank will not fully subscribe to the rights issue and will renounce part of the rights issue to Sabre and other investors.
Post-rights issue, the shareholding pattern will see BankMuscat having 26 per cent, Keppel 11 per cent, Sabre Capital 7 per cent and the public 28 per cent. Talwar said the bank would now start building a nationwide brand and franchise, besides attracting top talent to pursue this task.
He stressed the bank will continue to focus on the retail segment and consumer servicing.