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Tuesday, November 27, 2012

Oriental Bank raises Rs 1,025 cr tier-II capital

Oriental Bank of Commerce (OBC) has raised Rs 1,025 crore of capital through lower tier-II bonds to fund its business growth.

These bonds carry a coupon of 8.93 per cent a year and have tenure of 10 years.

Confirming the completion of the capital raising through the bond offering, V. Kannan, Executive Director, OBC, said this would help the bank conform to the Basel-III requirements. These bonds were rated AA+ by both CARE and ICRA.

The bank is looking at a capital adequacy ratio of over 12 per cent at end-March 2013. The Basel-III capital adequacy rules will kick-in on January 1 next year in India.

As of September 30 this year, OBC had a tier-I capital of 9.69 per cent. The overall capital adequacy ratio stood at 12.06 per cent (without including the profits of the first half).

Kannan did not rule out further tier-II bond issuance this fiscal. “In case there is a requirement, we will come out with another issue in December.”

The bank was looking to mop up Rs 1,000 crore through the recent bond offering. There was also a green-shoe option beyond the Rs 1,000 crore.

Including the green shoe option the bank has got Rs 1,025 crore through this issue. Kannan said.

As of end September 2012, OBC had headroom of Rs 5,157 crore of lower tier-II capital. Of this, the bank has now raised Rs 1,025 crore.

The OBC board had given authorisation for Rs 1,200 crore, implying that the bank could raise another Rs 175 crore without board approval.


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