Fairfax to buy 51% in Catholic Syrian Bank

MUMBAI: Canadian Billionaire Prem Watsa owned Fairfax India Holdings has proposed to buy a 51% stake in Thrissur based lender Catholic Syrian Bank for a total consideration of around Rs 1,200 crore. The deal would happen at a mutually agreed price of Rs 140 per share, the bank said in a statement of Saturday.

“Catholic Syrian Bank has taken various initiatives in the past few years to reinvent itself in the highly competitive banking space and the proposed Fairfax India investment will boost these efforts in a substantial manner,” the statement said. The deal is subject to regulatory and shareholder approvals.

This valuation is nearly 25% lower than what the bank was earlier demanding. Last year, Fairfax has made a formal offer valuing the bank at around Rs 1,300 crore, but the Canadian firm walked out from negotiations after some minority investors demanded higher valuation.

As part of the earlier proposal the bank had demanded a 51 per cent stake sale to Fairfax Holdings at Rs 160 per share and an additional premium of Rs 10-15 per share, but the deal fell through despite an in-principle nod from the Reserve Bank of India

With this, Prem Watsa, who is invested in diverse sectors from insurance to travel to airports will enter banking sector. Fairbridge is a wholly-owned subsidiary of Canadian billionaire Prem Watsa-owned Fairfax Financial Holdings.

Founded in 1921, CSB has a strong base in Kerala and a significant presence in Tamil Nadu, Karnataka, and Maharashtra. With over 1.5 million customers, its key focus areas are small and medium enterprises, retail clients, and non-resident Indians (NRIs). It has a strong deposit book as most of its NRI customers and expatriates in the Gulf send money home through the bank’s network.

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The bank reported a profit of Rs 1.55 crore in FY17 against a loss of Rs 149.72 crore the year before. Gross non-performing assets (NPAs) stood at Rs 600.10 crore in the fourth quarter compared with Rs 446.91crore in the year earlier. In percentage terms, it rose to 7.25% from 5.62%.