Federal Bank, Catholic Syrian closer to merger

17 June 2009

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.