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M. Ramesh

Chennai, Aug. 20 This week, UCO Bank will submit to the Government a proposal for its capital restructure, giving a detailed road map for how the bank will manage its capital requirements over the three years after its capital is restructured.

Confirming this to Business Line on Friday last, UCO Bank’s Chairman and Managing Director, Mr S.K. Goel, said that the bank would like at least half of the Government’s holding to be converted to preference capital. Thi s will be about Rs 285 crore of the Rs 800-crore equity capital of the bank.

UCO Bank’s proposal also envisages a follow-on public issue in the second year of the capital restructure and a tier-II capital issue in the third.

Upon receiving the proposal, the Government would send it to the Reserve Bank of India for its comments, after which it would be placed before the Cabinet for clearance. Mr Goel expressed confidence the whole process would be over by March.

UCO Bank’s capital restructure was expected to be over long ago. Mr Goel’s predecessor, Mr V. Sridhar, had told Business Line in February that the Government’s nod for converting a part of the equity capital into p reference would be over by March 2007.

The delay has never been adequately explained, but sources point out that UCO Bank is the only public sector bank attempting a capital restructure while already being listed.

The other banks that went through the process, such as Indian and Central, did not have any public shareholding when their capital was restructured. The authorities are, therefore, extra careful to ensure that the move is not seen as one that benefits the Government more than other shareholders.

More Stories on : Restructuring | Public Sector Banks

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