Canara Bank Sells Stake.

Canara Bank Sells Stake.

Canara Bank sells stake in Russian joint venture to SBI for Rs 121 crore

Canara Bank, one of India's leading public sector banks, recently sold its 51% stake in their Russian joint venture, Canbank Factors Limited, to the State Bank of India (SBI) for Rs 121 crore. The deal was announced in early March 2023, and it marks a significant move for both banks, particularly in light of the current economic climate.

The joint venture, Canbank Factors Limited, was established in 1995 in partnership with the Russian Bank for Development and Foreign Economic Affairs. The venture was set up to provide factoring services to the Russian market, which involves purchasing invoices from businesses and providing them with upfront cash, in exchange for a fee. The venture was initially successful, but it has struggled in recent years, with mounting losses and increasing competition from other financial service providers in the Russian market.

The sale of Canara Bank's stake in the venture to SBI comes as a strategic move for both banks. For Canara Bank, the sale will help the bank to streamline its operations and focus on its core banking business in India. The bank has been facing a range of challenges in recent years, including mounting non-performing assets (NPAs) and a need to improve its profitability. By divesting its stake in the joint venture, Canara Bank can free up resources to address these issues and improve its financial performance.

For SBI, the acquisition of Canbank Factors Limited represents an opportunity to expand its presence in the Russian market and diversify its revenue streams. The State Bank of India is already one of the largest banks in India, with a wide range of products and services on offer. However, like many other Indian banks, it has been looking to expand its operations beyond India's borders and tap into new markets. The acquisition of Canbank Factors Limited is a step in that direction, giving SBI a foothold in the Russian market and access to a new customer base.

The deal between Canara Bank and SBI is also noteworthy because of the economic climate in which it was made. The global economy has been impacted by the COVID-19 pandemic, with many businesses struggling to stay afloat. In this context, the sale of Canbank Factors Limited represents a bold move, showing that both banks are willing to take risks and make strategic investments to ensure their long-term growth and success.

In conclusion
, the sale of Canara Bank's stake in Canbank Factors Limited to SBI for Rs 121 crore is a significant move for both banks. For Canara Bank, the sale will help the bank to focus on its core banking business in India and address its challenges. For SBI, the acquisition represents an opportunity to expand its operations into the Russian market and diversify its revenue streams. The deal also demonstrates the banks' willingness to take strategic risks and make investments in the current economic climate.