Canara, HSBC & OBC insurance JV gets regulatory nod

The Insurance Regulatory and Development Authority (IRDA), on Thursday gave its approval to the proposed life insurance joint venture company of Canara Bank, Oriental Bank of Commerce (OBC) and HSBC Insurance (Asia-Pacific).

The JV, in which Canara Bank will hold a majority 51 per cent stake, will be known as Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited and has already been capitalised at USD 81 million (Rs 325 -crore).

HSBC Insurance, which is understood to have invested around Rs 177 crore in the JV, will have a 26 per cent stake in the company while OBC will hold 23 per cent stake.

While officials of were not available for comments, it is understood that the investment by Canara Bank and OBC are Rs 102 crore and Rs 46 crore respectively. Canara Bank, in which the Government has a 73.17 per cent stake, has over 2,600 branches and an asset size of USD 45.2 billion, while OBC has a branch network of 1,402 while its asset size stands at USD 22.61 billion as on March 31, 2008.

Canara Bank eyes buyouts this year

Public sector Canara Bank has hinted that during the current year it may acquire a bank which can increase its footprint in the North and West India.Speculations are rife that Canara Bank had evinced interest in taking over Mumbai-Dena Bank, which has strong base in Northern and Western India.

On the issue of funding of any possible acquisition, Rao, CMD Canara Bank said Canara Bank has been one of the strong banks with good fundamentals. There is no problem as far as capital for acquisition is concerned, he said. The bank, in which the government holds a 73% stake, could consider acquiring a bank having government stake of about 51%.Later Rao added that the bank is looking at expanding its footprint in the North and West India, as it already has a good network of bank branches in the south.

Read more in The Times of India article.

HSBC to set up Indian insurance JV

HSBC Holdings signed an agreement on Monday to form an insurance venture with two state-owned banks, gaining access to more than 40 million customers in an expanding market.

The global bank will hold a 26 percent stake in the venture -- the maximum allowed to overseas insurance partners. Bangalore-based Canara Bank will take a 51 percent stake, leaving the rest to Oriental Bank of Commerce.

The new company, Canara HSBC Oriental Bank of Commerce Life Insurance Company, will be capitalised at 3.25 billion rupees (80 million dollars), of which HSBC will contribute 1.77 billion rupees.Canara Bank will contribute 1.02 billion rupees and New Delhi-based Oriental Bank of Commerce 460 million rupees.

The venture will have access to more than 40 million customers and a nationwide sales network of 3,600 branches throughout India.

Read more in The Economic Times article.

Corporation Bank bids Rs 850/shr for Maruti stake

Enthused by the oversubscription to its offer to sell its remaining 10.27% equity in Maruti Udyog (MUL), the country’s largest car maker, the government hopes to raise around Rs 2,500 crore from the auction. The total number of bids received were for around 3,59,00,000 shares as against 2,96,79,709 shares on offer (1.21 times the subscription).

A Finance Ministry official said the auction process is likely to be completed tomorrow itself at a meeting of an empowered group of ministers (eGoM), which is overseeing the sale. The Maruti scrip was trading at Rs 802.85 towards close of trade on BSE, up from the previous close of Rs 800.

Financial bids for the shares, at a floor price of Rs 760, were deposited today by 36 of the 39 companies that expressed interest to participate in the auction. The highest bid of Rs 850 per share for a lot of 1,00,000 shares came in from public sector Corporation Bank. The lowest bid of Rs 765 came from the Union Bank of India.

As many 20 public sector banks, insurance firms and mutual funds put in bids, along with private sector entities like HDFC among others. State Bank of India and a couple of its associates, IDBI, GIC and Canara Bank also participated in the auction.

Read more in The Business Standard article.

Canara Bank eyes Dena Bank

Canara Bank, the country’s third largest bank, has set its sights on mid-sized Dena Bank and has appointed Ernst & Young to explore the possibility of the deal. This sets into motion the government’s move to introduce consolidation among public sector banks.

Sources close to the development said the chairmen of both banks would meet shortly, after which the matter would be taken up by the respective boards and employees would be consulted.

Bangalore-based Canara Bank, which has a network of 2,542 branches, is strong in the south while Mumbai-based Dena Bank, with its 1,050 branches, has a large presence in Maharashtra, Gujarat and Chhattisgarh. It overtook Punjab National Bank in 2005-06 to become the country’s second-largest public sector bank in terms of advances and deposits.

The merger will help Dena Bank, which has just come out of a huge burden of sticky loans or non-performing assets (NPAs). Though it is now better off financially, it has a limited capital base to grow business at the rates that the banking sector has seen in the last three years.

Read more in The Business Standard article.