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No book-building route for Canara Bank IPO

Our Bureau

BANGALORE, May 11

STATE-owned Canara Bank said that it would return Rs 175-Rs 225 crore capital raised through an initial public issue to the Government.

The bank will come out with its much-delayed maiden public issue in August-September. Work towards fixing the issue price and appointment of merchant bankers for the proposed issue will start this month.

Currently, Canara Bank has an equity capital base of Rs 578 crore, the Chairman, Mr R.V. Shastri, told presspersons here on Saturday.

Declining to detail the possible premium on the forthcoming issue, Mr. Shastri said: "Though there will be a good premium, it will be made affordable to the public''.

The bank also ruled out the book-building route to subscribe the issue. "We will go to the public directly'', he added.

Finally, Canara Bank has decided to come out with the IPO irrespective of the market conditions prevailing then. The tier-II capitalisation route was not attractive because securities are treated as subordinated debts so long as maturity period do not exceed five years.

For example, the bank's Rs 450 crore borrowings as subordinated loans last year would now be treated now as net demand and time liability (NDTL). This implies that the bank has to comply with both statutory liquidity ratio and CRR in these borrowings.

Meanwhile, the bank plans to "emerge as a financial super store'' in near future, Mr. Shastri said. "Most of our eight subsidiaries are profitable and we will like to prop them up this year'', he added.But, the bank's loss-making IT-arm Canbank Computers is likely to be sold off as it proves to be a drag on the bank's bottomline. "However, we are not in talks with anyone now for a possible sell-off'', he added.

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