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Canara Bank decides on takeover target

Our Bureau

THIRUVANANTHAPURAM, Dec. 19

CANARA Bank, one of the leading nationalised banks in the country, has finalised plans to take over another bank to expand its business.

Mr R.J. Kamath, Chairman and Managing Director of Canara Bank, told presspersons here on Tuesday that the bank proposed to be taken over has a major presence in Gujarat and Maharashtra. He, however, declined to name the bank.

He said Canara Bank had taken over 11 banks in the past, ``but 12 sounds a better number''. The process of bringing the new bank, which was ``like-minded'', within its fold would be completed before March 31 next year, he added.

He ruled out his bank joining the insurance bandwagon at least for the time being. The bank has already got seven subsidiaries which have to be strengthened before entering into a new area, he noted.

Even so, Canara Bank is exploring the possibility of dealing in the policies of other insurance companies as a subsidiary activity. And it may take up full-fledged insurance business some time in 2002, Mr Kamath said.

Referring to the performance of the bank, he said it was aiming to reach the ``magical figure'' of Rs 1,000 crore in net profit by 2006, the centenary year of the bank.

For the current year, the total business of the bank was targeted to reach Rs 85,000 crore, comprising deposits of Rs 55,000 crore and advances of Rs 30,000 crore. As on December 1, the business has totalled Rs 78,300 crore and at this rate, the target o f Rs 85,000 crore was expected to be achieved in February itself, the Chairman said.

The gross profit for the current year was anticipated to be in the region of Rs 1,200 crore and the net profit at Rs 430 crore. Last year, the bank posted a net profit of Rs 236 crore.

The net NPA was slated to come down to four per cent from 5.3 per cent in the preceding year. The bank has given an assurance to the Finance Ministry that the NPA would be reduced by Rs 1,000 crore in absolute terms during the year, Mr Kamath pointed out .

The bank's subordinate debt issue of Rs 300 crore, with a coupon rate of 11.95 per cent, had been over-subscribed by Rs 120 crore, he said and added that capital adequacy following the issue was more than 10 per cent now.

The voluntary retirement scheme announced by the bank was one of the most ``employee-friendly'' as it offered 100 per cent cash. The VRS was aimed at a reduction of 10 per cent of the total workforce of 55,000 and the bank expected nearly 6,000 employees to opt for the VRS, he said.

Canara Bank was opening two computer training institutes in Kerala, at Alleppey and Thrissur. The institutes, which would cost Rs 1 crore, would offer a six-month course to 25 students each free of cost. The recurring costs of Rs 30-35 lakh every year fo r the institutes would be met from the bank's Platinum Jubilee Fund, Mr Kamath said.

Depending on the success of the institutes, a third would be opened in Thiruvananthapuram, he said.