Canara Bank chief R.V. Shastri in Calcutta on Monday. A Telegraph picture

Calcutta, May 24: Canara Bank plans to dilute the government’s holding in the bank to 51 per cent from the current 73 per cent by the end of 2004-05.

“We will conduct the next capital restructuring by the end of the current fiscal. Our plan is to divest another 22 per cent of government holding,” chairman and managing director R. V. Shastri said. He was speaking on the sidelines of the banking conclave organised by the Indian Chamber of Commerce.

The bank’s capital adequacy ratio now stands at 12.6 per cent. It will need more capital as the business grows this year to Rs 1.55 lakh crore from Rs 1.34 lakh crore in 2003-04.

“We have not yet decided whether we will go for a rights issue or a preferential one,” Shastri said.

The bank also plans to launch an asset reconstruction company. “We want to launch one on our own. However, we will invite other banks to join the company,” Shastri said.

There are two asset reconstruction companies — ARCIL floated by IDBI, ICICI, SBI and others and Arsec India floated by UTI — in the country.

Canara Bank also plans to transfer Rs 400-500 crore of sticky assets to one of the existing asset reconstruction companies to clean up its books.

The bank is also trying to rev up its global presence by setting up representative offices in Hong Kong, Shanghai and Dubai.

It is starting full-fledged banking operations in Moscow in joint venture partnership with State Bank of India. At present, the bank has operations in London.

Canara Bank holds 40 per cent of Commercial Bank of India, while SBI holds the rest 60 per cent. The bank’s Moscow operations will begin in another two months.

The bank has no plans to hive off any of its seven subsidiaries. “Over the years, Canbank has invested Rs 130 crore and in 2003-04 we have earned a net profit of Rs 157 crore from them,” Shastri said. The bank has also started cross-selling with its subsidiaries.