Canara Bank looking for opportunities for foreign acquisition

Kolkata, Jul 26 (UNI) Canara Bank, the country's second largest public sector Bank, was looking for suitable opportunities to go for foreign acquisition during the current fiscal apart from making forays into the insurance sector.

Speaking to newsmen here today on the sidelines of the FICCI- sponsored Banking conclave, Canara Bank Chairman and Managing Director M B N Rao said by increasing their presence on the foreign soil they were scouting for the right opportunity to acquire some small and medium sized overseas financial institutions during the current fiscal.

He said though the Bank at present has only one foreign branch in London, it had got the RBI's necessary clearance to open another full fledged branch in Hong Kong and two representative offices in Samurai in China and Sharjah in West Asia within the next few months.

" We are also for making our presence felt in South East Asia and looking for a suitable partner in any of the South East Asian countries to help fulfil our desire, " he stated.

Mr Rao, however, refused to disclose the name of any foreign institution with which necessary talks had been initiated.

Regarding the Bank's plan to directly enter the life insurance business in a big way, Mr Rao said talks with one major public sector Bank and with a foreign insurance company were at the final stage, " and I hope to formally announce the name of our partners before the end of this year following the signing of formal agreement in this regard. " Despite repeated requests, he refused to disclose the names of the partners in the joint venture effort primarily because of SEBI guidelines, but hinted that Canara Bank was likely to enjoy the majority 51 per cent stake in the multi-million dollar deal.

The intitial corpus of this venture would be Rs 100 crore as required by the RBI, he said.

Regarding his business plan, he said the Bank was poised to record a healthy 18.74 per cent growth in business to Rs 2, 33,000 crore by March, 2007.

Of these, advances would be to the tune of Rs 95,000 crore and the deposit portfolio would be Rs 1,30,000 crore. " We have also targetted to bring 1500 branches in the country under the core Banking system by March next year besides covering about 1400 villages under the financial inclusion in accordance to the government plan. " Asked about the possibility of consolidation of Canara Bank with nine office subsidiaries, he said, " Since majority of these subsidiaries were performing pretty well and making substantial profit, we are not in a hurry to merge them with the parent institutions. " He, however emphasised that consolidation of Indian public sector Banks was a must.

Earlier, addressing the Banking conclave, Mr Rao said Canara Bank had already set up a joint venture to acquire a Bank in Moscow in partnership with SBI.

In this venture Canara Bank enjoys maximum 26 per cent stake, he said and also hinted at his plan to further widen the capital base of the Canara Bank with the likely proposal of raising Rs 4000 crore from the market on both Tier I and Tier II bonds.

He, however, did not mention the timeframe of raising the capital base.

FICCI, Eastern regional council, president C K Dhanuka highlighted the problems being faced by the industrial community in seeking short term credit in the backdrop of the RBI's proposal to hike the interest rates by basic 0.25 points.

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