Bank of India may dilute 5pc govt stake

The country’s sixth-largest bank in terms of assets, Bank of India (BoI) is considering diluting 5% government stake.

Mr Narayanasami,BoI chairman and managing director, indicated the bank is weighing the option of raising resources through the qualified institutional placement (QIP) route. “We are open to both follow-on issue and the QIP route. However, latter offers more advantages since it could be faster and cost effective,” he said.

If the bank goes ahead with the QIP offering, it will be the first public sector bank to do so. Among private banks, Axis Bank and Centurion Bank of Punjab recently concluded QIP issuances. With 5% stake sale, the bank would raise close to Rs 600 crore at the current market price.

The resources raised will enable BoI fund its new businesses and help it in meeting the new Basel II norms. “It will be useful in making investments in the insurance business and in any new venture we may consider taking up in future,” Mr Narayanasami said. BoI has total assets of Rs 86,842 crore with net profit of Rs 1,123 crore as on March 31, 2007.

(Source: Economic Times