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Central Bank Offers Rs 104.8 Per Share For Centbank Home Finance
by Irfan Khan | November 05,2009 - 11:16 AM

Topics        : Mergers & Acquisitions
Industries  : Banking/Financial Services
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Mumbai based PSU - Central Bank of India has offered to buy out other shareholders in its home finance subsidiary, Centbank Home Finance, offering Rs 104.8 per share.

Unit Trust of India and National Housing Bank with 16% stake each are the major shareholders in Centbank Home Finance. Central Bank owns 59.5%, while remaining 8.5% is held by Housing and Urban Development Corporation.

The capital base of the home loan company is Rs 20 crore, while its net worth is Rs 48 cr. During 2008-09, the mortgage company’s net profit was Rs 3.18 cr. Its gross outstanding loans were Rs 257.88 crore at the end of March.

The Mumbai-based public sector lender had appointed Ernst and Young for advice on restructuring and valuation.

In order to increase the profitability of Centbank Home, Central Bank recently provided it a credit line of Rs 100 crore that would be partly used to repay the entire debt of NHB. The recast included shifting the head office of Centbank Home from Bhopal to Mumbai.

Central Bank is likely to sell off its home loan business in the next couple of years. The bank is currently looking to raise the valuation of the unit before divesting it.

Most of the government-owned banks having separate home loan arms have divested or are in the process of divesting the business in order to avoid duplication since they themselves offer home loans. For instance, PNB sold 26% stake in its home loan arm, PNB housing finance to Dawnay Day. IDBI is also contemplating to sell its home loan arm.


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