Centurion Bank Stock Trust sells 4 crore shares of CBoP

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show »

CNBC-TV18's Banking Editor, Latha Venkatesh throws some light on the history of Centurion Bank and its relation with the 20th Century Finance Corporation.

She says that the original promoter owner of Centurion Bank, Dev Ahuja held 26% stake in Centurion Bank through his company 20th Century Finance Corporation .

Thereafter, Centurion Bank was reverse merged with 20th Century Finance and because of the settlement between 20th Century Finance and Centurion Bank those shares came to be held in a trust, which is Centurion Bank Trust. All this happened before 2002. 

In 2002 the bank had gone into bad days and it had to be re-capitalised. At that time Rana Talwar's Saber Capital entered into the fray and Bank of Muscat’s one branch in Bangalore was merged with Centurion Bank, informs Venkatesh.

When all the writing down of capital happened, as part of the scheme these shares were held in trust by Centurion Bank Trust and those share were supposed to be available to Centurion Bank as and when it needed it. At this moment the Board has given approval to the trust to sell those shares and those are indeed being sold by Ambit Capital which did the deal at Rs 24.50 and over Rs 100 crore comes to the bank.  

She says further that, what they learn from the sources at the bank is that one third of this Rs 100-Rs 105 crore odd will be used to settle the old debts or some liabilities of the old promoter. The balance of around Rs 65 crore will be used as provisions against bad loans. That will mean that in this year, FY06, Centurion Bank’s net NPA could be well below 2%.