Centurion Bank flies high

Centurion Bank is expected to conclude an 'acquisition of stake' deal with Sabre Capital and other multinational banks on Wednesday, and this has encouraged the scrip upward.

By 12:50 IST, the scrip of the private sector bank spurted 5.14% to Rs 9.20. Relatively high volumes of over 165,000 shares were recorded on the counter till then. Centurion Bank has now galloped 11.5% from Rs 8.25 on 21 April 2003. Prior to that, between 7 and 21 April, the scrip had, in contrast, lost 17% from Rs 9.95.

Reports that Centurion Bank may sew up an equity acquisition deal with Sabre Capital is providing the scrip with the fuel to rise. According to reports, Sabre Capital and BankMuscat, along with a few other investors, may pick up controlling stake in Centurion Bank.

Centurion Bank may also reduce a part of its capital as part of the restructuring process. Reports reveal that the recast package has already got the Reserve Bank of India's in-principle approval.

The 26% stake pledged by the bank's original promoter Dev Ahuja's TCFC Finance to settle his obligations to the bank is likely to be sold by the bank in due course of time. The bank is also expected to come out with a rights issue of around Rs 200 crore (Rs 2 billion). Post rights issue, the bank's capital adequacy ratio will rise to 10%. The CAR of the bank for the first quarter of 2002-2003 was 4.05% against the Reserve Bank of India stipulated 9%.

Incorporated in June 1994, Centurion Bank was promoted by the erstwhile 20th Century Finance Corporation and associates in association with Keppel Tatlee Bank (which was earlier Keppel Bank of Singapore). The bank's focus so far has been on growth-oriented, higher end, medium-sized and emerging blue-chip companies in the corporate sector through a variety of products and services. It also has a keen interest in the retail sector.

The bank is also into international businesses encompassing both fund-based and non-fund based assistance to corporate and institutional clients.

The bank provides various services like ATMs at all its branches, computer terminals at selected customers' premises, facility of operating account from any of the bank's branches, instant transfer of funds, speedy collection of instruments, etc. It is being positioned as a professionally managed bank with presence in all major financial and growth centres. It plans to increase its focus on retail customers and raise the portfolio of retail assets to 50% from the current 35%.

Centurion Bank has 57 branches, 17 extension counters, 135 ATM's and a strong retail base of around 500,000 customers.

Earlier, promoter Devendra Ahuja offloaded his stake in the bank. He sold 53 lakh shares in the secondary market thus bringing down his stake to 4.1% from 7.6%.

For the third quarter ended 31 December 2002, the company recorded a net profit to Rs 3.10 crore compared to a net loss of Rs 26.04 crore in the corresponding period of the previous year. Total income declined by 5% to Rs 124.23 crore (Rs 1.24 billion) from Rs 130.74 crore (Rs 1.3 billion) in DQ 2001.

As on 31 December 2003, promoter holding in Centurion Bank stood at 44.2%, while the public, foreign entities and domestic institutions held 30.22%, 19.10% and 2.14%, respectively.