Canara Bank raises tier II capital

Canara Bank has raised tier II capital of Rs 500 crore via private placement of bonds, a company release said here on Friday. The bank had issued unsecured, redeemable, non-convertible subordinate bonds to raise the money.

The issue opened for subscription on February 11 and closed on February 17 on receiving full subscription. The bonds had a maturity of 111 months and were rated AAA/Stable by CRISIL, a credit rating agency.

Last month, V P Shetty, the chairman and managing director of Canara Bank had told reporters,one of the reasons for raising tier II capital was to improve the bank's provisions against various exposures.

"We wish to prepare ourselves for Basel II," the international norms on greater safety against losing money on various loans banks give and other operational and market risks.

Competition was heating up in the market and pressure was on for resource mobilisation.The bank had resource to cover its lending targets over the next three to four months, he had said.

The bank's capital adequacy ratio, 12.66 at the end of September 2004, had risen to 13.93 after December. "We would end the year (31 March) with a CAR of about 13," he said.