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Centurion promoter Ahuja quits board

Our Bureau

MUMBAI, April 17

CENTURION Bank Ltd on Wednesday informed the BSE that Mr Dev Ahuja, one of the promoters who holds 26 per cent of the bank's equity, and Mr V.S. Srinivasan, had stepped down from its board of directors. Mr Srinivasan was the Managing Director of the bank till recently.

A notice to Bombay Stock Exchange said that Mr Satish Kaura, another director, had also resigned from the board. In view of Mr Kaura's resignation, Ms Kanta Ahuja, alternate director to him, also ceased to hold the office of director, the notice said.

Centurion Bank is perceived by the stock market as a takeover target by foreign banks and new generation private banks. Several prospective suitors have done due diligence of the bank. A top official of the bank, however, told Business Line that none of the suitors who conducted due diligence had got back.

The bank, in which IFC Washington, Asian Development Bank and Keppel Tatlee Bank of Singapore, hold stakes, has been struggling to raise resources to increase its capital adequacy ratio. The bank had proposed Rs 126-crore rights issue last year. It was eventually cancelled as it failed to enthuse shareholders.

Mr Dev Ahuja's 26 per cent equity holding is also understood to be "up for sale''. RBI sources had some time ago told Business Line that the regulator wanted Mr Ahuja to distance himself from the bank and had also told him, albeit informally, to quit. Whether his decision to quit now had anything to do with the regulator's wishes is not known. Bank officials said RBI had got nothing to do with it.

Mr Ahuja's shares, held through TCFC Finance Ltd, which was reverse-merged with Centurion, are pledged to the bank under a financial support agreement (FSA). TCFC Finance had given up its holding in Centurion Bank as a full and final settlement with respect to its maximum obligation of Rs 40 crore under the FSA.

TCFC Finance had pledged its holdings of face value of about Rs 40 crore in respect of specific assets for which the FSA was given at the time of its merger. The voting rights of the shares are held by a legal firm in a trust on behalf of the bank.

The bank has plans to offload the pledged shares to a strategic investor. The bank has had discussions with many strategic investors to place the shares. The strategic investor is expected to also contribute additional capital, apart from acquiring the block of shares. The search for a partner is being co-ordinated with IFC, Washington.

Mr Srinivasan had said in October last that the bank would be recapitalised in excess of Rs 120 crore and the commitment on capitalisation should happen by March 31, 2002. This, however, is yet to happen.

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