The Hindu Business Line : UCO Bank gets nod for follow-on public issue

UCO Bank has received the Union Finance Ministry’s approval for a follow-on public issue in 2008-09, according to Mr S.K. Goel, Chairman and Managing Director of the bank.

“Depending on the price and the market condition, we will look at raising close to Rs 400 crore through the follow-on issue during the third quarter of this financial year,” he said. The present market condition being not conducive to new issue, the bank would consider entering the market in November or December.

Capital Restructuring

The bank would issue 10-crore shares with a face value of Rs 10 per share, Mr Goel confirmed. The follow-on public issue would bring down the Government holding to 57 per cent from the present 75 per cent.

The bank had earlier received the Government approval for capital restructuring and was awaiting the Cabinet approval for the same. “We are hoping to receive the Cabinet approval in the next 10-15 days,” said Mr Goel.

Under the capital-restructuring plan, the bank has received approval to convert Rs 300 crore of Government holding into preference shares. The capital restructuring would give room for the follow-on offer, he said.

Raising money

The bank, according to the Chairman, would also look at issuing non-cumulative preference shares to the tune of Rs 325 crore during July-September. “We will look at raising this amount, when we feel the need for capital and once there is a pick up in credit offtake,” he said.

The capital adequacy ratio of the bank was at 10.09 per cent as on March 31, 2008. “The bank’s capital adequacy is under strain and, therefore, the additional capital support is needed. However, it is difficult to estimate the impact of the issue, which will be clear only after they announce the valuations,” said an analyst with a broking firm. UCO Bank scrip closed at Rs 36.30, up 4.91 per cent from the previous close.

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UCO Bank gets nod for follow-on public issue