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Federal
Bank employees protest against takeover by ICICI Bank
James
Paul
21 September 2004
 Kochi:
Employees of the Kerala-based Federal Bank, have protested
against the possible take over by the ICICI bank. The
employees have decided to mobilise support from shareholders
and the public to prevent the takeover.
"Bank
mergers hitherto occurred due to some exigency, but in
our case there is no need at all as we are on a very strong
wicket", said V K Prasad, deputy general secretary
of the Federal Bank Officers Association.
ICICI
Bank is currently the single largest shareholder with
20.44 per cent stake in Federal Bank, which has nearly
6,000 employees. With the Federal Bank's annual general
meeting scheduled for September 27, ICICI Bank is reportedly
proposing to increase its strength in the bank's board.
Currently,
ICICI has two nominees on the bank's eight-member board.
With two of the present directors set to retire, ICICI
bank proposes to get two more of its nominees elected
at the annual general meeting, informed sources said.
The two retiring members are M Joseph and M S Parthasarathy
who are not ICICI nominees.
By virtue of ICICI Bank being the largest shareholder
in Federal Bank, sources said, it can push through the
election of its nominees.
Employees
of Federal Bank feel the next possible steps before ICICI
Bank would be to sell its stake in the Kerala-based bank,
acquire it for a merger, or even keep it as a subsidiary.
Headquartered
in Alwaye in Ernakulam district, Federal Bank was incorporated
as Travancore Federal Bank in 1931 and has emerged as
a profitable operation with low deposit costs. It is also
the largest scheduled commercial bank in Kerala and runs
a wholly owned subsidiary - Fedbank Financial Services
- for its merchant banking activities.
In
1993, there was a private placement of equity with the
ICICI Group, and in March 1994 the bank came out with
a public issue. The bank has had a healthy growth in deposits,
which stood at Rs.134.77 billion ($2.87 billion) as on
March 31, 2004, compared with Rs.109.47 billion ($2.33
billion) a year earlier. The bank's capital adequacy ratio
also improved to 11.48 percent from 11.23 percent during
the period under review.
Likewise
the earning per share shot up from Rs.48.36 to Rs.62.65,
and the net profit of the bank reached an all time high
of Rs.1.36 billion ($28.93 million) from Rs.1.05 billion
($22.34million).
 Similarly,
the net non-performing assets came down to an all time
low of 2.89 percent and the book value of the share grew
from Rs.244 to Rs.298.
Currently,
the Federal bank share trades at Rs.312.
List
of reports on Federal Bank
List
of reports on ICICI Bank
List
of general reports on Banking
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