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| United Bank plans to launch IPO by January |
| Namrata Acharya / Kolkata Oct 30, 2009, 00:10 IST |
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The Reserve Bank of India (RBI) has approved United Bank of India’s (UBI’s) initial public offering (IPO), which will reduce the government stake in the bank by 16 per cent.
The bank would file the offer document for the same by November-end and the issue is likely to hit the market by January, said S C Gupta, chairman and managing director,UBI.
“RBI gave clearance for the IPO without any changes and the proposal has been forwarded to the government. We expect to receive the government approval in the next 10-15 days,” said Gupta.
The government has approved the bank’s capital restructuring plan, which will reduce its paid-up capital from Rs 1,532 crore to Rs 266 crore. The balance Rs 1,266 crore will be shifted to the capital reserve account of the bank. The bank plans to issue 50 million shares of Rs 10 each at a premium.
In a parallel development, the bank has sought Rs 800 crore from the government to maintain an eight per cent Tier-I and overall 12 per cent capital adequacy ratio (CAR) by 2012, in keeping with the government advice to public sector banks. This is in addition to Rs 800 crore already approved by the government for the bank.
In March this year, the government had contributed Rs 250 crore as Tier-I capital at UBI, by subscribing to perpetual non-cumulative preference shares (PNCPS) at repo plus 100 basis points.
Of the Rs 800 crore already approved, the bank expects to get the remaining Rs 550 crore as Tier-I capital by December 2009. The CAR of the bank will be more than 13 per cent after the capital infusion.
Gupta said UBI was open to acquiring a smaller bank after the IPO. It is also planning to set up a housing finance subsidiary. UBI will also be opening a representative office in Bangladesh shortly.
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