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Business News/ Companies / News/  Canara Bank plans to hire bankers for up to Rs3,500 crore QIP
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Canara Bank plans to hire bankers for up to Rs3,500 crore QIP

Canara Bank is planning to raise capital by selling shares to financial institutions and is looking to hire merchant bankers for the same

Last month, the bank’s board had cleared raising capital by selling stakes in its asset management and housing finance units, either fully or partially. Photo: MintPremium
Last month, the bank’s board had cleared raising capital by selling stakes in its asset management and housing finance units, either fully or partially. Photo: Mint

Mumbai: State-owned Canara Bank Ltd plans to raise capital by selling shares to financial institutions and is looking to hire merchant bankers for the same.

The bank is planning to raise up to Rs3,500 crore through qualified institutional placement (QIP). 

“The issue size may vary based on various factors including, but not limited to, management discretion and the decision of the shareholders," a tender on the bank’s website showed. 

“Further, the bank intends to initiate the process relating to the selection and appointment of BRLMs (book running lead managers)/merchant bankers to prepare the requisite documents and to undertake various activities in relation to the QIP," the tender dated 8 December, 2017, read.

Last month, the bank’s board had cleared raising capital by selling stakes in its asset management and housing finance units, either fully or partially. 

According to analysts, Canara Bank is among the state-owned banks in which the government may infuse capital early. 

With a capital adequacy ratio of 12.45% at the end of September, Canara Bank’s capital position is well above the regulatory requirement 10.25%.

On 6 December, Urjit Patel, governor of the Reserve Bank of India had said that the central bank is working with the government on the extent of capital that state-owned banks need to raise, and the amount of recapitalisation bonds to be placed on the banks’ balance sheets as the government’s equity contribution.

He had also said that the “recapitalisation bonds will be front-loaded for banks that have managed their balance sheet’s strength more prudently, and can use injected capital to lend besides providing for legacy asset losses." 

For other banks, the capital allocation will be based on their resolve and progress towards reform in a significant and time-bound manner. 

In October, finance minister Arun Jaitley had announced an unprecedented Rs2.11 trillion recapitalisation plan to strengthen public sector banks. This includes recapitalisation bonds of Rs1.35 trillion.

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Published: 11 Dec 2017, 04:39 AM IST
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