Financial Daily from THE HINDU group of publications
Tuesday, Jun 13, 2006
Financial Daily from THE HINDU group of publications Tuesday, Jun 13, 2006 |
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Money & Banking
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Public Sector Banks Vijaya Bank to raise Rs 350 cr as tier II capital Our Bureau
MR PRAKASH P. MALLYA
Bangalore , June 12
Vijaya Bank proposed to raise about Rs 350 crore by way of tier-II capital during the current year. Speaking to Business Line, the Vijaya Bank Chairman and Managing Director, Mr Prakash P. Mallya, said, "We intend raising the funds in multiple tranches during the year." The bank has already reached close to the threshold of tier one capital in the form of equity. The Government's current holding is at 54 per cent. Vijaya Bank's capital to risk weighted asset ratio is 11.94 per cent, of which tier one capital is 9.56 per cent. This comprises Rs 433.52 crore of equity and Rs 1236.05 crore by way of reserves. Consequently, flexibility to raise additional equity was limited. However, the tier I holding gave the bank sufficient flexibility to raise tier-II capital through long-term bonds or in the form hybrid capital. Pricing was yet to be decided, Mr Mallya said, but conceded that coupons would be higher than in the past in view of the firm interest rate environment. The recent issue made by the Punjab National Bank for Rs 1,000 crore (Rs 500 crore plus another green shoe option of another Rs 500 crore) was priced at 8.45 per cent. Placements by UTI Bank, which is AA+ rated is priced at 8.75 per cent for ten years.
Related Stories: More Stories on : Public Sector Banks
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