Mar 28 2010 , Chennai
Catholic Syrian to consider offer on29th March 2010
Religare Enterprises has made a Rs 800 crore offer to buy Catholic Syrian Bank (CSB), persons close to the development told Financial Chronicle. The CSB board will meet on Tuesday to discuss Religare’s offer, they added.
The move comes after a Bangkok-based Indian businessman, Sura Chansrichawla, offloaded 14 per cent of his 24 per cent stake on Friday to Religare and its associates.
Contacted by FC, the bank’s managing director, V P Iswardas, did not confirm or deny the development. He said there had been no official communication.
Shachindra Nath, group chief operating officer of Religare Enterprises, did not return a call seeking comments, while an e-mail sent to its spokespersons remained unanswered till the time of going to press.
Religare’s offer tops the aborted over Rs 400 crore offer made by Kerala-based Federal Bank, which already holds a 5 per cent stake in CSB. Federal Bank called off the deal on valuation concerns. Lar-sen & Toubro, which has plans to set up a bank, holds 5 per cent in CSB.
The acquisition will help fulfil Religare’s ambition to set up a bank. With the deal, Sura Chansrichawla has brought down his stake to 10 per cent from 24 per cent, as mandated by the Reserve Bank of India.
Any transfer of shares of over 1 per cent in CSB needs RBI’s approval.
Chansrichawla has transferred less than 1 per cent each to a number of people said to be acting in concert with Religare so that the transaction does not need RBI approval.
However, the deal needs to adhere to RBI rules on transfer of shares in private sector banks.
As per the existing RBI policy, any allotment or transfer of shares that takes the aggregate shareholding of an individual or a group to five per cent or more of the paid-up capital of the target bank requires RBI clearance.
It also restricts the shareholding of a single entity or group of related entities directly or indirectly to 10 per cent of the paid-up capital.
As per the 2004 guidelines, if the acquisition or investment takes the shareholding of the applicant to 10 per cent or more and up to 30 per cent, RBI will also take into account other factors such as source and stability of the money used for the acquisition and the ability to access financial markets as a source of continuing financial support for the bank.
Besides, RBI will also consider the business record and experience of the applicant, including any experience of acquisition of companies, the extent to which the corporate structure of the applicant will be in consonance with effective supervision and regulation of the bank.
The latest development in CSB comes in the wake of the budget which said RBI would give more banking licences to eligible finance companies.
Religare, owned by billionaire Malvinder Singh, offers insurance, broking, wealth advisory, asset management and investment banking services. He and his younger brother Shivinder are estimated to have a combined net worth of $3 billion. The Singh family sold its entire 35 per cent in Ranbaxy Laboratories, India’s biggest drugmaker, to Japan’s Daiichi Sankyo for about $2 billion in 2008
The move comes after a Bangkok-based Indian businessman, Sura Chansrichawla, offloaded 14 per cent of his 24 per cent stake on Friday to Religare and its associates.
Contacted by FC, the bank’s managing director, V P Iswardas, did not confirm or deny the development. He said there had been no official communication.
Shachindra Nath, group chief operating officer of Religare Enterprises, did not return a call seeking comments, while an e-mail sent to its spokespersons remained unanswered till the time of going to press.
Religare’s offer tops the aborted over Rs 400 crore offer made by Kerala-based Federal Bank, which already holds a 5 per cent stake in CSB. Federal Bank called off the deal on valuation concerns. Lar-sen & Toubro, which has plans to set up a bank, holds 5 per cent in CSB.
The acquisition will help fulfil Religare’s ambition to set up a bank. With the deal, Sura Chansrichawla has brought down his stake to 10 per cent from 24 per cent, as mandated by the Reserve Bank of India.
Any transfer of shares of over 1 per cent in CSB needs RBI’s approval.
Chansrichawla has transferred less than 1 per cent each to a number of people said to be acting in concert with Religare so that the transaction does not need RBI approval.
However, the deal needs to adhere to RBI rules on transfer of shares in private sector banks.
As per the existing RBI policy, any allotment or transfer of shares that takes the aggregate shareholding of an individual or a group to five per cent or more of the paid-up capital of the target bank requires RBI clearance.
It also restricts the shareholding of a single entity or group of related entities directly or indirectly to 10 per cent of the paid-up capital.
As per the 2004 guidelines, if the acquisition or investment takes the shareholding of the applicant to 10 per cent or more and up to 30 per cent, RBI will also take into account other factors such as source and stability of the money used for the acquisition and the ability to access financial markets as a source of continuing financial support for the bank.
Besides, RBI will also consider the business record and experience of the applicant, including any experience of acquisition of companies, the extent to which the corporate structure of the applicant will be in consonance with effective supervision and regulation of the bank.
The latest development in CSB comes in the wake of the budget which said RBI would give more banking licences to eligible finance companies.
Religare, owned by billionaire Malvinder Singh, offers insurance, broking, wealth advisory, asset management and investment banking services. He and his younger brother Shivinder are estimated to have a combined net worth of $3 billion. The Singh family sold its entire 35 per cent in Ranbaxy Laboratories, India’s biggest drugmaker, to Japan’s Daiichi Sankyo for about $2 billion in 2008
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