Canara to raise $100m tier-I cap

Canara Bank Chairman and Managing Director M B N Rao said today the bank plans to raise $100 million (Rs 443 crore) hybrid Tier I capital from overseas by March.

The bank raised $250 million (Rs 1,107 crore) of upper Tier II capital recently. The state-owned bank has postponed its plans of raising equity capital.

"I am able to generate enough capital funds at attractive rates without diluting shareholders' equity," Rao told reporters on the sidelines of a banking technology seminar organised by the Confederation of Indian Industries.

The bank has enough room to raise Tier II capital that will be sufficient for at least one year, Rao said.

"But that doesn't prevent us from raising equity as that is a strategic decision," Rao said.

Rao does not expect the government's borrowing programme to be high in the years to come as, "tax collection is robust and economy is doing good."

The banks' statutory liquidity ratio is 29 per cent.

The bank is looking at divesting a minority stake in its mutual fund arm to a global company, Rao said.

It was reported earlier that the minority partner could be the Netherland-based Rabo Bank's asset management company, Robeco.

Rao said the bank will retain majority stake in CanBank Mutual Fund.

The final decision for induction of a strategic partner will be announced in next few weeks.

Canara Bank is planning to float a life insurance joint venture by March. The state-owned bank is likely to retain the majority stake in the planned life insurance subsidiary.

However, Rao declined to give any further details on the insurance venture.