June 2009
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Federal Bank, Catholic Syrian closer to merger

The board of directors of Federal Bank and Catholic Syrian Bank is expected to meet in a month's time to discuss a merger of the two south-based lenders.

Reports quoting sources close to the deal said the acquisition price will be fixed when the boards meet next.

Thailand-based NRI, Surachan Chawla, holds a 21 per cent stake in privately-held Catholic Syrian Bank, while Federal Bank holds a minority 4.99 per cent stake in CSB.

In fact, Chawla reduced his 34 per cent stake in CSB to 21 per cent at the instance of the Reserve Bank of India, in 1994. Chawla also then agreed to sell his stake to Federal Bank.

The merger move, sources said, was aimed at staving off the threat of a bigger bank acquiring Cathoilc Syrian Bank.

Federal Bank, focused mainly on the three southern states of Tamil Nadu, Andhra Pradesh and Karnataka, had total business of Rs54,590 crore – relatively small. But, with net worth of Rs 4,325 crore, it is the fourth largest private bank after ICICI Bank, HDFC Bank and Axis Bank in terms of net worth.

Federal Bank reported a fourth quarter net profit of Rs114.17 crore, up 11 per cent against a net profit of Rs102.86 crore in the fourth quarter last year. Net profit of the bank for the financial year ended March 2009 was up 35.98 per cent at Rs500.49 crore against Rs368.05 crore during the corresponding period of the previous year.

Total income for the fiscal ended 31 March 2009 increased to Rs3,831.15 crore from Rs2910.16 crore in the previous fiscal, showing an increase of 31.65 per cent. Total business of the bank increased to Rs54,590 crore.

With 33 branches, CSB reported total deposits of Rs6,332 crore and a net profit of Rs37 crore in fiscal 2008-09.

Source: Domain B

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