Sabre Capital, promoted by former Standard Chartered Bank CEO Rana Talwar, may team up with BankMuscat and a few other investors to pick up a controlling stake in Centurion Bank.

The bank board is likely to meet on April 16 to finalise the recast of the bank's equity structure.

A few global funds, including a Citi group venture fund and Chrysalis Capital, had earlier joined Sabre to invest in the bank.

However, sources said as Chrysalis and Citi had invested in UTI Bank, they were unlikely to invest in Centurion Bank. BankMuscat was earlier in talks with IDBI to take a stake in IDBI Bank.

BankMuscat, which operates a single branch in India, in Bangalore, had earlier expressed interest in Centurion Bank, too, but subsequently walked out of the deal.

"The infusion of funds will be through a mix of a preferential issue and sale of the bank's existing capital. The bank is likely to get a fund infusion of around Rs 200 crore (Rs 2 billion)," sources said.

Sabre and the other funds that are investing in the bank will first buy the 26 per cent stake pledged by Dev Ahuja's TCFC Finance to settle his obligations to the bank. The preferential issue of capital will follow this stake transfer.

The major foreign stakeholders in Centurion Bank, Keppel Bank (around 17.71 per cent), ADB (10.22 per cent) and IFC (8 per cent), are likely to participate in the issue.

When contacted, Centurion Bank officials refused to comment on the issue. Sources said the Centurion Bank stake would be widely held now with no single shareholder holding a significant stake, unlike in the past where Ahuja had held a large stake.

Sabre and its partners will have at least two representatives on the board. Centurion Bank's Chairman and Managing Director V Janakiraman, who received an extension for six months in January this year, is likely to be at the helm for some time, with a new managing director being brought in at a later stage.

The key management people are expected to come from Sabre.

The net worth of the bank was around Rs 40 crore (Rs 400 million) on December 31, 2002. The Tier I capital of the bank had eroded after it reported a net loss of Rs 161.84 crore (Rs 1.618 billion) in March 2002.

The bank had posted a net profit of Rs 3.10 crore (Rs 31 million) in the third quarter ending December 2002. However, for the nine month period it had posted a net loss of Rs 13.96 crore (Rs 139.6 million).

The bank has Rs 100 crore (Rs 1 billion) as subordinated debt. However, this cannot prop up the capital adequacy ratio of the bank since the Tier II capital of any bank cannot be more than 50 per cent of its Tier I capital.

Once fresh capital is brought in, Centurion Bank can take the advantage of the subordinated debt.

After the preferential issue, the bank's capital adequacy ratio will be above the RBI stipulated ratio of around 10 per cent. The CAR of the bank for the first quarter of 2002-2003 was 4.05 per cent.