Is Federal Bank taking over CSB?

THIRUVANANTHAPURAM: The air is abuzz with news of a possible merger of two of Kerala's leading banks ��� the Federal Bank and Catholic Syrian Bank. CSB, however, has chosen to dismiss this as baseless. "There are no talks of a merger with another bank or any kind of takeover. Reports in this regard are baseless," official sources in CSB told TOI.
What lends strength to the rumours is the Federal Bank's interest in the latter.In July this year, Federal Bank acquired 4.99% stake in CSB from Bangkok-based NRI businessman Surchan Chansri Chawla. He owned 38% in CSB, but has to bring it down to 10% in keeping with RBI guidelines on ownership norms of banks.
The unanimous election of 5 members of the CSB's board of directors at the AGM held on September 26 added fuel to fire as its composition is rumoured to have gone in favour of the Federal Bank. Those elected were C F John, Jos C Chakko, C K Gopinathan, N R Achan and K Ipe Peter. While John and Chakko were re-elected to the Board, the rest are new faces and are believed to be in favour of a merger. Ipe Peter is a former general manager of the Federal Bank and Achan, a former chairman of CSB.
Three years ago, Federal Bank had tried to take over Lord Krishna Bank ��� a new entity which had managed to make considerable strides in the banking business. But the attempt fell through due to opposition from the employees' unions. Later LKB was acquired by the Centurion Bank of Punjab, which in turn merged with HDFC. But the present move, sources say, has the backing of the employees unions.
CSB's net profit in 2007-2008 stood at 36.56 crore. Federal Bank's net profit in this period stood at Rs 368.05 crore.