The Hindu Business Line : Union Bank mulls rights issue

“We would be making the plans for the next financial year in February, and if we find there is a need for capital, we may look at a rights issue as an option,” Mr M.V. Nair, Chairman and Managing Director of Union Bank of India, told Business Line.

The Government currently holds 55.43 per cent stake in the bank, with public institutions including mutual funds, financial institutions and banks, insurance companies and foreign institutional investors (FIIs) having 31.1 per cent stake.

The rest of the 13.47 stake is held by non-institutional investors which include corporate bodies and individual shareholders.

“Since the Government shareholding is nearing the 51 per cent mark and as per the Banking Regulations Act, the Government’s stake in public sector banks cannot be reduced below 51 per cent.

The best option that we have is to exercise the choice of the rights issue,” Mr Nair said.

Debt issue

Union Bank, on Thursday, also raised a debt of Rs 600 crore, which includes Rs 200 crore in perpetual debt and Rs 400 crore in Tier-II bonds.

The bank is targeting a total business of Rs 1,85,000 crore of which Rs 1,05,000 crore would be from deposits and Rs 80,000 crore from advances. Currently, the total business is at Rs 1,65,000 crore.

Mr Nair also said that the capital adequacy ratio of the bank after the introduction of Basel II norms in April next year will be 11.5 per cent.

“The net interest margin (NIM) of the bank is also expected to dip marginally to around 3 per cent for the current fiscal from 3.05 per cent last year. As The NIM at the end of September this year was at 2.86 per cent. However, a clearer picture will emerge only by the end of December,” he said.

“The bank has recently entered into a memorandum of understanding with India Infrastructure Finance Company Ltd to work together in the areas of creating deal flows, syndication and other banking services,” Mr Nair said.

More Stories on : Rights Issue | Public Sector Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Max NY Life sees India business growing fast

Birla Sun Life hikes capital base

Bond yields soften on liquidity overhang

PNB amalgamates 4 rural banks

Bank officers to seek fixed working hours, pension

`Connect better with customers'

Union Bank mulls rights issue