Central Bank plans Rs 400 cr primary float

Central Bank of India has sought the finance ministry's approval to come out with an initial public offer (IPO). The bank plans to tap the capital market before September. The size of the issue is pegged in the region of Rs 300-400 crore.

"We plan to come out with an IPO in the first half of this financial year," Dalbir Singh, chairman and managing director of the bank, said.

The bank has petitioned the finance ministry for restructuring its capital, which at Rs 1,124 crore is quite bulky. The bank is one of the three nationalised banks "" the other two being United Bank of India and Indian Bank "" not having tapped the capital market.

The restructuring envisages converting about 65 per cent (Rs 724 crore) of the outstanding capital into redeemable preference share capital carrying three to four per cent interest and payable after 10 years.

Once the restructuring comes through, the bank will be in a position to service a leaner capital base (Rs 400 crore).

The earnings per share will also go up and a respectable price/earnings multiple could be attained. This will enable the bank to come out with a premium issue, said officials.

Bancassurance tie-up with New India: The New India Assurance Co has signed up with Central Bank as its bancassurance partner to sell its products across the public sector bank's 3,200-odd branches.

New India has already signed MoUs with State Bank of India, Corporation Bank, Union Bank and Punjab National Bank for the sale of its insurance products.

R Beri, chairman and managing director, New India Assurance, said that premium through the bancassurance channel contributed one per cent towards total premium income of Rs 4,040 crore.

New India expects premium income through the bancassurance channel to grow and contribute about five per cent to the total premium collection.