Karnataka Bank delays new asset management JV

Karnataka Bank delays new asset management JV
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First Published: Wed, Aug 29 2007. 12 22 AM IST
Updated: Wed, Aug 29 2007. 12 22 AM IST
Mumbai: Karnataka Bank Ltd (KBL) has put on hold its plans to set up an asset management joint venture (JV) citing capital constraints, a top official said on Tuesday.
“We are putting it on hold and may look at it depending upon availability of capital,” KBL chairman Ananthakrishna said in Mangalore. The bank would need capital to fund its projected business growth of 20-22%, and also for the non-life insurance JV. It had earlier said its planned JVs would contribute as much as 15% to revenues by March 2009.
“It should be a gradual process and getting into too many joint ventures at a time would not be advisable,” he said.
However, he added, the bank plans to enter into online broking in a tie-up with an established broking firm. “We are in talks with four to five players in the business,” Ananthakrishna said.
The private sector lender holds 15% in the insurance JV. The other partners are state-run Allahabad Bank, Indian Overseas Bank, food and personal care products’ maker Dabur India and Sompo Japan Insurance Inc.
The JV has been named Sompo Universal Ltd, and O.N. Singh, former chairman of Allahabad Bank, has been appointed managing director, Ananthakrishna said.
The initial capital base of the JV would be Rs100 crore, he added.
KBL recently raised Rs121 crore through tier-II bonds, as part of its plan to raise up to Rs150 crore. Its capital adequacy ratio was 12.72%, Ananthakrishna said.
Karnataka Bank had headroom to raise another Rs200-300 crore, and would consider doing this some time in September or October.
Shares in the bank were trading 2.27% up at Rs180.60 in the Mumbai market.
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First Published: Wed, Aug 29 2007. 12 22 AM IST