CANARA BANK MAY RAISE RS 500-600 CRORE'

Canara Bank could possibly look at raising Rs 500-600 crore through the debt route over the next few weeks. The bank has also received shareholder approval to raise up to Rs 2,590 crore through various options, including a preferential allotment or qualified institutional placement (QIP).
Talking to ET, on the sidelines of the bank’s 8th annual general meeting (AGM), executive director HS Upendra Kamath said: “We need additional capital for funding our growth. In the initial phase, we may look at the debt route (tier-II) capital to take advantage of the current benign interest rate regime.” Canara Bank is projecting its total business (advances and deposits) to rise to Rs 5 lakh crore against Rs 4.06 lakh crore registered in FY10.

The AGM also saw shareholders give nod for a further issuance of shares through a preferential allotment, QIP or the like.

“This (shareholder nod) is an enabling provision allowing us to raise up to Rs 2,590 crore. We have adequate head-room as the Union government’s holding is still over 73% but we are in rush to dilute equity as we would then have to service a higher equity base. With over Rs 3,000 crore in net profits, we also have sizeable quantum of cash profits which would in turn be deployed into the business,” said KL Jagadish Pai, executive director of the bank.

Shareholders also approved the audited financial results besides giving nod for payment of dividend. Canara Bank’s board of directors had proposed a dividend of 100% (Rs 10 for Rs 10 face value share). On Monday on BSE, the bank’s share scrip closed up 3.97% at Rs 497.7 on the back of robust Q1 results. It touched a 52-week high of Rs 514.6 on Monday. The bank posted a net profit of Rs 1,013 crore in the first quarter ended June 30, 2010, against Rs 555 crore in the same period in FY10.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Canara-Bank-may-raise-Rs-500-600-crore/articleshow/6189366.cms