CORPORATES nursing hopes of floating a bank may make a mental note that almost 15% shares of Catholic Syrian Bank (CSB) are about to change hands.
Bangkok-based NRI businessman Sura Chansrichawla, who controls around 24% of CSB shares, has lined up a string of non-resident investors to offload 14.55% equity of the bank.
Under the arrangement, Chansrichawla and his associates will sell a shade below 1% to each of the overseas investors, some of whom are based in Hong Kong and Singapore. The proposed transaction, which would involve physical transfer of non-demat shares, will lower Chansrichawla’s holding in the bank to a little below 10%.
“The deal is being structured in a way to conform to an earlier court ruling that any transfer of more than 1% CSB equity will require RBI’s approval... The stock will be sold at Rs 375-400 a share,” said a source familiar with the development. For other private banks, RBI approval is needed if 5% or more shares are bought by a single entity or a group of entities acting in concert. Under the circumstances, neither Mr Chansrichawla nor CSB will have to approach the regulator.
Interestingly, it’s learnt that a Delhi-based financial services group which has serious ambitions to enter banking, has been in touch with many of the buyers for a possible deal at a later point. “These individuals or offshore entities can be bought out if the concerned corporate receives the RBI approval,” said the source.
When contacted by ET, Sura Chansrichawla as well CSB managing director VP Iswardas declined to comment.
The Thrissur-headquartered CSB hit the headlines last year after the Catholic Church in Kerala stalled its merger with another southern bank, Federal. CSB, with its Rs 8,000-crore balancesheet, has 360 branches, of which 80% are in rural and semi-urban areas. Chansrichawla, who earlier sold around 4% stake to Federal and was looking for an exit, had backed the merger proposal. Discussions on the present transactions began shortly after the CSB-Federal deal fell through.
For Chansrichawla, this would be a more profitable deal than Federal which was willing to pay less than Rs 300 crore. The NRI businessman had also given a commitment to RBI that he would lower his group’s stake in CSB to 10% by March 31, 2010.
The matter is expected to come up before the CSB board when it meets later this month. Since the shares are in physical form, a change in ownership has to be ratified by a board committee. There would be other procedures like opening bank accounts for new buyers and getting the deal registered.
Besides small shareholders belonging to the Kerala Catholic community, a few foreign funds hold around 4% each in the unlisted bank and about 10% is controlled by a local stockbroker through several individual shareholders.
It’s unclear how the transaction will go down among the local community, primarily comprising Syrian Catholics. There were reports that last year, they had approached the Thrissur Achbishop to form an action group under the banner of CSB Protection Committee and made him its chairman. Efforts were on to raise funds from local and NRI members of the community to buy stake in the bank. However, it is not known how much the community has mobilised till now.