| UCO readies plan for bank buy | |
| Namrata Acharya / Kolkata November 15, 2009, 0:03 IST | |
May go for a Rs 800-cr follow-on public offer in January 2010.
Public sector lender UCO Bank is planning to present to the government a blueprint for acquiring a slightly smaller public sector bank.
SK Goel, chairman and managing director, UCO Bank, is likely to initiate preliminary discussions on the issue in his meeting with senior officials from the Union finance ministry in Delhi this month.
The Kolkata-based lender is eyeing a bank with a business of about Rs 1,20,000 crore, as it aspires to reach the Rs 3,00,000-crore business mark.
 “The bank is in informal discussions to acquire another public sector bank with business of about Rs 1,20,000 crore, as it aims to have a business of Rs 3,00,000 crore in the next few years. The bank will discuss the proposal with finance ministry officials shortly, along with other issues like the proposed follow-on public offer. Once it has an in-principal nod from the government to acquire a bank, more serious discussions can be initiated,” said a source close to the development.
The bank is also planning to come out with a follow-on public offer (FPO) by January 2010, which will reduce government holding from 64 per cent at present to nearly 52 per cent. It expects to raise about Rs 800 crore through the issue.
In December 2008, UCO Bank restructured its equity capital by converting Rs 250 crore of the total equity capital of Rs 799.36 crore into perpetual non-cumulative preference shares. The capital restructuring led to the government stake coming down from 74.98 per cent to 63.59 per cent.
Recently, the government has also shown keenness in initiating the consolidation process in the banking industry so as to bring more competition in the sector.
In the quarter ended September 2009, its total business was close to Rs 1,70,000 crore.
Among the 19 nationalised banks, UCO Bank ranks among the top ten, with its closest competitor being Syndicate Bank in terms of business.
The bank is also awaiting the Reserve Bank of India’s (RBI) approval for its general insurance foray and has shortlisted about six partners for the venture. The bank is expected to hold 30 per cent stake in the proposed venture.
As part of capital restructuring, the bank received Rs 450 crore in March 2009, out of Rs 1,200 crore promised by the government to shore up its Tier-I capital. The bank is expected to get the remaining Rs 750 crore through preferential allotment of shares in the next few months.
The capital adequacy ratio of the bank (according to Basel-II norms) is close 11.75 per cent at present.
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