The Hindu : Canara Bank to raise Rs. 500 cr. as Tier II capital

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Wednesday, Feb 26, 2003

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Canara Bank to raise Rs. 500 cr. as Tier II capital

MUMBAI FEB. 25. Canara Bank will raise Rs. 500 crores as Tier II capital through issuance of bonds to shore up its capital adequacy ratio (CAR) even as it expects to earn a fee-based income of Rs. 20-25 crores from the bancassurance arrangement signed with Aviva Life Insurance.

"The issue, which will come to the market in next few days, will have a tenor of seven to eight years and a greenshoe option of Rs. 100 crores,'' Canara Bank Chairman and Managing Director, R. V. Shastri, told reporters here today after launching the sale of Aviva Life's products through its 50 branches in 39 cities.

Tieup with Aviva

The bond issue would also help the bank enhance its CAR from 11.89 per cent to 12 per cent in 2002-03, he said.

Referring to the bancassurance tie-up with Aviva, he said Canara Bank expected a fee-based income of Rs. 20-25 crores in the first year of operations. The bank was also expected to decide on a partner for non-life insurance shortly.

Aviva Life Insurance Managing Director, Stuart Purdy, said initially three products — EasyLife (savings and protection plan), PensionPlus (personal pension plan) and Amar Suraksha (mostly for rural sector) — would be available to the customers.

Nearly 50 bank employees have been trained for selling the products, he said, adding Aviva already had tie-ups with American Express Bank, ABN Amro Bank and Lakshmi Vilas Bank.

Mr. Purdy said at present 50 per cent of Aviva Life's sales came through the bancassurance channel.

PTI

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