Canara Bank, one of the largest public sector banks in India, has transferred its entire 40% shareholding in a joint venture (JV) with a Russian bank to State Bank of India (SBI). The move comes as part of Canara Bank’s ongoing efforts to rationalize its overseas operations and focus on its core business in India.
The JV in question is a partnership between Canara Bank and Russia’s OAO Sberbank, which was established in 2008. The partnership was formed to provide banking services to Indian companies operating in Russia and to Russian companies operating in India.
The transfer of the shareholding to SBI will enable Canara Bank to reduce its exposure to Russia’s challenging economic environment, while SBI will gain a foothold in the Russian market. SBI is India’s largest public sector bank and has a strong presence in the country’s banking sector.
The move is in line with the government’s plan to consolidate the public sector banks in India, which is aimed at strengthening the banking sector and improving its efficiency. The government has been encouraging public sector banks to focus on their core business and to divest non-core assets in order to improve their financial health.
The transfer of the shareholding is subject to regulatory approvals from the Reserve Bank of India and the Central Bank of Russia. Once the approvals are obtained, the joint venture will be renamed as SBI-Sberbank, with SBI holding 40% of the share and Sberbank 60%.
The transfer of Canara Bank’s shareholding in the JV to SBI, will help the bank to focus on its domestic operations and also align with the government’s plan of consolidation of public sector banks. The move will also give SBI a foothold in the Russian market, which is considered to be a major step forward in the bank’s global expansion plans.