United Bank of India today said it has raised Rs 300 crore by selling perpetual bonds. The bonds having face value of Rs 10 lakh each and carrying a coupon of 9.27% were rated AA by rating agencies CRISIL and CARE.
"These bonds shall be Basel II compliant and eligible to be a part of the additional tier I capital under the new Basel III norms. However, being Basel II compliant, the bonds shall be liable to progressive discount of 10% per year starting from January, 2013 under Basel III," Bhaskar Sen, chairman and managing director of United Bank of India, said in a statement.
The bonds issued by the bank are perpetual and 'call option' may be exercised by the issuer at the end of the tenth year, with approval of the Reserve Bank of India (RBI).
ICICI Bank, YES Bank, Kotak Mahindra Bank, Axis Bank, ISec Primary Dealership and Trust Investment Advisors were the arrangers to the issue.
"Since a lot more clarity on issuance of Basel III compliant bonds and pricing thereof are expected from the regulators and market participants, we decided to go with Basel II compliant bonds this time. However, the board gave a go-ahead for raising of up to Rs 500 crore through bonds, and we will explore issuing Basel III bonds in our subsequent tranches," Sen said.
United Bank of India has also approached the government and RBI for approving its proposed rights issue. "We expect to receive the clearances soon," Sen said. The bank has already taken steps to appoint merchant bankers and other intermediaries for the issue.
The Kolkata-based public sector bank closed July-September quarter with a capital adequacy ratio of 12.08%.