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Thursday, November 22, 2012

United Bank gets board nod to raise Rs 750 crore

United Bank of India plans to raise Rs 750 crore through a mixture of debt and equity instruments in this fiscal.

Of the total, Rs 500 crore will be raised through private placement of debt instruments, within a month. This will be followed by a rights issue of Rs 250 crore later this year.

According to Chairman and Managing Director Bhaskar Sen, the Board of Directors of the bank approved its capital-raising plans at a meeting on Wednesday.

The fund infusion will boost its capital-adequacy ratio and fund its growth needs. The bank aims 17 per cent growth in advances by the end of this fiscal.

“We had discussion about raising capital through both debt and equity routes and we have got the Board’s approval for both,” Sen told Business Line.

Capital-adequacy ratio of the bank stood at 12.08 per cent as on September 30. The tier-I capital was at 8.46 per cent.

In a notification to the Bombay Stock Exchange on Thursday, the bank said that the Board has approved the issue and allotment of unsecured perpetual tier -I bonds in the nature of promissory notes of Rs 10 lakh each for cash at par up to a maximum amount of Rs 250 crore. The issue will have a green-shoe option up to a maximum of Rs 250 crore through private placement.

“Now that we have the Board approval, we will go in for the ratings. Once that is done, we will take a call on when to raise the funds based on the market conditions. But we might be raising capital by way of debt by December this year,” Sen said.

Additionally, the bank has also got the Board approval for issuing equity shares of Rs 10 each at a premium to be decided at a subsequent date on rights basis to its existing shareholders for raising Rs 250 crore.

“We might take about two-three months’ time to complete the formalities pertaining to the rights issue,” he said.


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