MUMBAI: State-owned Canara BankBSE 1.17 % is set to raise Rs 500 crore this fiscal by selling stake in its non-core assets after it posted a huge loss in fiscal year 2015-16, a top official told ET.
“The bank has decided to sell stakes in Can Fin HomesBSE -0.97 % and Canbank Factors. And this will help us strengthen our equity base. There is no plan to divest stake from its mutual fund and insurance business,” Rakesh Sharma, managing director of Canara Bank said.
The bank plans to sell 13 per cent stake in Can Fin Homes and reduce its holding to 30 per cent, he said.
In case of Canara Factors, the bank has 70 per cent stake.
“We are considering two options. Either we will dispose it off completely or dilute some 20 per cent in the factoring business. We have yet not decided it,” he said.
Can Fin Homes has a market cap of Rs 3,195 crore. The shares of Can Fin Homes moved from Rs 990 on March 1 to touch a high of Rs 1,309 on April 13 and closed at Rs 1,200 on Thursday on the face value of Rs 10. Sensex moved from 23779 to close at 26763 on Thursday.
In March, finance ministry directed PSU banks to divest their holdings in non-core assets as it wants the lenders to raise resources internally to meet their capital requirements.
In case of Canara Robeco Mutual Fund and Canara HSBC Oriental BankBSE 1.27 % Life Insurance Company, the Bengaluru-based bank owns 51 per cent.
“Presently there are no plans to dilute stake in either of these two subsidiaries because we want to strengthen them further and once the valuation improves, we will get better pricing,” said Sharma.
Among others, Bank of India has decided to divest its holding to raise Rs 1,000 crore while IDBI Bank plans raise Rs 650 crore similarly. State Bank of IndiaBSE 0.12 % too, plans to divest stake in its insurance ventures to raise capital.
The move to sell-off the non-core assets such as stake in subsidiaries comes in the backdrop of banks struggling to raise capital.
Source: Economic Times
