KOCHI:The grey market for Catholic Syrian Bank (CSB) shares has once again woken up from a long slumber and the shares are said to be changing hands at prices as high as Rs180 and upwards following the announcement of Fairfax decision to buy 51 per cent stake in the bank.
The bank management is also in a euphoric mood since the Fairfax has decided to dust down a deal that has fallen through on the issue of valuation about 9 months ago. As the market grapevine goes, the Fairfax has improved the offer from the earlier Rs90 per share to the present Rs140 per share – a sweetening of more than 55 per cent that allowed the bank to bag an extra kitty of Rs431.5 crore.
However, businessbenchmark.news was not able to officially confirm the earlier offer price of Rs90, where the negotiations allegedly tripped. Talking to this business news portal, the chairman of the bank, TS Anantharaman said, “I don’t want to say by how much the Fairfax has improved its offer this time. I would certainly say that Fairfax has increased the offer price substantially this time over that of the earlier one.”
The shareholders are upbeat because they believe that Fairfax will be able to give a proper direction to the bank, which has been drifting for some time for want of sufficient capital to grow its balance sheet. The share capital of the bank is poised to jump from Rs80.96 crore to Rs167.253 crore – up by a whopping 106.58 per cent.
Likewise, the capital base or the shareholders’ equity will expand from around Rs827 crore to approximately Rs2035 crore, representing a 146 per cent growth. The capital adequacy (CAR) ratio, which currently is
just above 11 per cent will also witness a commensurate growth giving the bank enough headroom to grow.
CSB, which has been busy exploring various incongruous fund boosting optionsin the past few years, including raising funds from private equity firms and floating initial public offering (IPO), has now settled down and is left with quality time to focus on an ambitious growth trajectory.
The bank has before it the daunting task of generating profit in the future, which is indeed a far cry from the past few quarters, when the bank failed to do so. The bank is also going through a tectonic change, which is not just confined to the change in size or management structure, but more so the authorized capital, the FDI limit – going up to 74 per cent, etc.
The EGM is expected to give the green signal to increase the authorized capital from the present Rs120 crore to Rs200 crore, whereas the non- resident body corporate (OCB & Foreign Portfolio Investors) stake is set to go up substantially from 15.75 per cent to 59.22 once the deal is through.