HSBC's acquisition of the CDC stake in UTI Bank may be a precursor to a consolidation phase in private sector banks.

Foreign banks have set their eyes on Global Trust Bank (GTB), Bank of Punjab (BoP), IndusInd Bank, Karur Vysya Bank (KVB), Federal Bank, Karnataka Bank, Bank of Rajasthan, South Indian Bank and Lakshmi Vilas Bank (LVB).

The foreign players are evincing interest both for minority as well as majority stakes in these banks.

Depending on the situation, they are willing to play the role of a strategic as well as financial investor, said an industry analyst.

Another new private bank, which will get new stakeholders, soon is Centurion Bank. Sabre Capital, Bank Muscat, Keppel will sign the shareholders agreement tomorrow.

On the prowl are Citibank, Standard Chartered Bank, ABN Amro Bank, ING Vysya Bank and HDFC Bank. However, banks such as HDFC Bank and ICICI Bank could also become a target for acquisition as some of the foreign banks with deeper pockets are ready to catapult in the big league by acquiring stake in these banks, thereby throwing a challenge to the big public sector banks.

Global Trust Bank is already in advanced talks with Development Bank of Singapore for offering 49 per cent stake through a preferential allotment.

The deal may come through in the next few weeks. If this happens, DBS would merge its existing branch with GTB.

Promoters of Bank of Punjab, another potential target, denies that they are looking for selling off stake in the bank. However, they admit that they are looking for a strategic investor.

"We are open to any good tie-up which would enhance our shareholder value. However, the promoters will not exit from the bank," said BoP chairman Darshanjeet Sigh.

Big foreign banks such as StanChart, Citi and ABN Amro are not ready to take the plunge right now. Jaspal Bindra, global head, corporate & institutions, StanChart, said that India is a growth centre but the bank does not have any immediate plan for buyouts. 

A Citi source also said the HSBC announcement will not have any impact on Citi's original plan. "We will wait for the government's guidelines on certain issues before taking any decision," the source said.

ICICI Bank holds a 20.44 per cent stake in Federal Bank and an 11 per cent stake in South Indian Bank — two hot acquisition targets.

Said Kalpana Morparia, executive director, ICICI Bank, "We have always treated this as financial investment. We will treat this as any other financial investments."

According to sources, the bank will exit these banks if it gets a significant premium to its acquisition prices. Promoters holdings in other private sector banks such as Karur Vysya Bank, Karnataka Bank and Lakshmi Vilas Bank are negligible.

The promoter stake in KVB is at 4.43 per cent, in LVB 1.77 per cent and almost non-existent in Karnataka Bank. The other major stakeholders in KVB are Rakesh Jhunjhunwala and people acting in concert with (5.003 per cent stake) and GMR Group (4.61 per cent).

Acquiring these banks will not be easy as the potential acquirers will be required to make an open offer directly.

"Most of the old private sector banks are community based and a section of shareholders could stall the whole process," said senior bankers.