News: Canara bank to hire merchant bankers to help raise capital

C-Suite

Canara bank to hire merchant bankers to help raise capital

Canara Bank Ltd has plans to hire merchant bankers who would help the bank raise capital. Read on to know more.
Canara bank to hire merchant bankers to help raise capital

As per the latest media report, Canara Bank Ltd has plans to hire merchant bankers who would help the bank raise a capital of INR 3,500 crore through qualified institutional placement (QIP).

“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,” as per the tender dated 8 December, 2017.

As per the report, the board of Canara Bank had cleared raising capital by selling stakes in the housing finance units and asset management, either partially or fully. The bank has 12.45% as the capital adequacy ratio which is above the requirement of 10.25%. 

The government had announced in October this year that it was working on the amount of capital to be raised by the banks and also the requirement of the recapitalization bonds as part of their balance sheet which would be part of government's equity contribution.

Urjit Patel, Governor of Reserve Bank of India has said then, “..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.”

The report also states that as per the analysts, the government is likely to infuse capital in the bank early.

Banks require capital to meet regulatory requirements under Basel III norms which will get fully implemented on 31st March, 2019 and also to meet other business objectives. The Finance Ministry had announced INR 2.11 trillion recapitalization plan for the state lender spread over two years. Of this 1.35 trillion will be met through the sale of the recapitalization bonds and INR 76,000 trillion through budgetary allocations.

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Topics: C-Suite, #Jobs

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