MUSCAT -- Centurion Bank of Punjab, which is partly owned by BankMuscat, and Lord Krishna Bank have decided to merge together to form a bigger bank. The boards of Mumbai-based Centurion Bank and the Kerala-based Lord Krishna Bank approved the merger proposal yesterday. "Centurion Bank will become a much bigger and stronger bank with the merger," Sulaiman Shabbal, Head of International Operations at BankMuscat told the Observer. Shabbal said there would be a dilution of BankMuscat's stake in Centurion Bank of Punjab.
But this will be decided later after both banks agree on the swap ratio. The merger will be beneficial for both institutions as it will help the combined entity to achieve economies of scale. "BankMuscat has achieved remarkable growth by way of mergers and acquisitions in the recent past. Now, Centurion Bank is taking the same route," he said, indicating that the Indian bank had recently merged with Bank of Punjab. Centurion Bank and Lord Krishna Bank are seeking to combine to expand their reach, increase their capital and cut costs.
The boards will meet again on September 4 to agree the terms. "Growing by inorganic means is an important component of our strategy," Centurion Bank Chief Executive Officer Shailendra Bhandari said in the statement. "The proposed merger with Lord Krishna Bank would further improve our franchise and customer proposition across the country." The combined entity will have a network of 361 branches.
Further, Centurion Bank has approvals from the Reserve Bank of India (RBI) to open another 30 branches in the year ending March 31, 2007. Centurion Bank of Punjab (CBP), which is professionally managed by a globally experienced team, has a nationwide reach through its network of 249 branches and 402 automated teller machines (ATMs). The bank aims at serving all the banking and financial needs of its customers through multiple channels, each of which is supported by state of the art technology.
CBP was formed by the merger of Centurion Bank and Bank of Punjab, both of which had strong retail franchises in their respective markets. It has a well-managed and growing retail assets business, including leadership positions in two-wheeler loans and commercial vehicle loans.
Bank of Punjab brought with it a strong retail deposit customer base in North India, in addition to a sizeable small and medium enterprises (SMEs) and agricultural portfolio.
Similarly, Lord Krishna Bank has a network of 112 branches spread across 11 states. The bank has also expanded its correspondent relationships across the globe with 230 banks in 95 countries. Ambit Corporate Finance is advising Centurion Bank and Merrill Lynch & Co is advising Lord Krishna Bank. Deloitte Haskins & Sells and N M Raiji & Co have been appointed to determine the share swap ratio.
By A E James
© Oman Daily Observer 2006
