Centre says no to Citibank group firms’ merger

Sanjay Sardana & Ashu Kumar

New Delhi, Aug 26: THE government has put a spoke in the wheel of the merger of Citibank group companies, Citicorp Credit Services India Limited (CCIL) with e-Serve International Ltd (formerly known as Citicorp Securities & Investment Ltd).

The department of economic affairs in the administrative ministry has raised objection to the merger, which has been further deferred for the time being.

It has been more than eight months since the shareholders of e-Serve approved the merger in December last year. The company’s board had recommended the merger of the two companies in October last year.

Citibank Overseas Investment Corpn holds 32.41 per cent stake (35 lakh equity shares of Rs 10 each) in the equity of e-Serve International and 47.71 per cent in Citicorp Credit Services. e-Serve, a listed company on the Indian bourses, holds the balance 52.29 per cent equity stake in Citicorp Credit Services. The merger was sought on the grounds of complementary nature of businesses of CCSIL and e-Serve International.

The exchange ratio was earlier fixed at 4:5, ie, four fully paid equity shares of Rs 10 each of e-Serve for every five shares of CCSIL.

Post-merger, the equity stake of Citibank Overseas Investment Corporation would go up marginally to 34.69 per cent amounting to Rs 4.26 crore represented by 42.6 lakhs equity shares of Rs 10 each.

Apart from being a non-banking finance company, e-Serve, since August 1998, has been offering IT-enabled transaction processing services in the banking and finance sector.

Citicorp Credit Services India, on the other hand, is engaged in providing collection and call centre services, managing collection processes and providing IT-enabled transaction processing services in the area of banking finance to Citicorp Group entities in India and offer the same to third party customers as well.