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M. Ramesh

Chennai , Feb. 18

UNITED Western Bank intends to come out with a public issue in the next six months, the bank's Chairman and CEO, Mr Satish Marathe, told Business Line.

The Maharashtra-based bank is one of the smaller private sector banks with a total business of Rs 10,000 crore, of which deposits are about Rs 6,000 crore. Since advances have been growing and the capital adequacy ratio is around 10 per cent, the bank needs to raise capital, Mr Marathe said. It has an authorised capital of Rs 100 crore and paid-up equity of Rs 30 crore. Mr Marathe said the proposed capital raising effort would see the bank through for the next 2-3 years.

Responding to a question, Mr Marathe said that there was room for small private sector banks too. The bank's strategy for growth is through branch-and-extension counter expansion. It finds extension counters as an inexpensive way to expand. Even in a city like Mumbai, there are about 250-300 pockets that do not have any bank branches, he said.

He said that the bank enjoyed good spreads. Cost of deposits works out to 5.5 per cent and average yield on advances is at 9 per cent. However, the bank's net non-performing assets (NPAs) are about 8 per cent, despite good cash recoveries. In the first three quarters of the current year, the bank recovered Rs 55 crore. Mr Marathe was confident that another Rs 35 crore would be recovered by March. Still, the bank is likely to end the year with a net NPA level of 7 per cent.

United Western Bank today has three shareholder groups. The Makharias, Mumbai-based industrialists, hold around 10 per cent stake, SICOM, the investment arm of the Maharashtra Government, holds another 9 per cent and the employees' unions hold 8.5 per cent. Is the bank a takeover target? Mr Marathe said that it is not, as "none of the shareholder groups wants to sell their shares."

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