Corporation Bank may sell 6% stake next year

Corporation Bank may consider diluting the government's 6 per cent stake next year, making it the bank's third public offer.

"Government holding in the bank is close to 57.17 per cent. This would allow us another 6 per cent dilution. Given the bank's capital adequacy ratio, another fund raising would not be required at least this year. Then we might consider the proposal," said V K Chopra, chairman and managing director.

Chopra also said the bank has considerable room for raising Tier-II capital as its capital adequacy ratio stood at 17.16 per cent.

On the quantum of funds the bank would raise, Chopra said, "The bank's shares are ruling at Rs 440, while 6 per cent would mean around 86 lakh shares." This provides the bank to raise around Rs 370 crore from the primary market.

The bank is also looking at increasing its asset base by Rs 300 crore once its wholly owned subsidiary, Corp Home, is merged with it. The bank is also expecting a 30 per cent growth in bottomline and has targeted a Rs 55,000 crore total business for 2005-06. Last year, the bank registered a Rs 123 crore net profit, while total business achieved last fiscal stood at Rs 45,779 crore.

Meanwhile, the bank has applied to the Reserve Bank of India for opening representative offices in Dubai and Hong Kong. Back home, the bank has firmed up plans of opening 70 more branches by the year-end and has decided to set up majority of these in location other than south. It has also decided to install around 200 automated teller machines.