Corporation Bank is exploring the possibility of picking up a stake in UTI Bank through a preferential issue, which the latter has slated for March to bolster its capital.
If the sale goes through, it will be the first instance of a public sector bank taking a stake in a private bank.
According to sources close to the top management of both banks, Corporation Bank Chairman Cherian Verghese met the UTI Bank brass on Saturday. Corporation Bank has also started a due-diligence exercise on the UTI Bank books.
UTI Bank had a capital-adequacy ratio of 9.84 per cent on December 31, 2002. Since its topline has been growing at over 40 per cent a year, the bank needs fresh capital to keep the ratio above the mandatory 9 per cent.
UTI Bank has lined up at least six suitors for the preferential allotment and bank is expected to get board and shareholder clearance in March to launch the issue within this financial year.
Corporation Bank officials were not available for comment. However, sources in the know of the development said the discussions were at a preliminary stage and Corporation Bank, along with a few others, might pick up a small stake in UTI Bank.
