City Union Bank to raise Rs 300cr via QIP

Kumbakonam-based City Union Bank (CUB) is planning to raise Rs 300 crore through the qualified institutional placement (QIP) route.

The money will be used to fund its expansion plan and to increase the networth to Rs 1,000 crore over the next two years, a senior bank representative said.

Speaking to Business Standard, N Kamakodi, executive director, CUB, said the bank’s total assets was around Rs 5,500 crore. “Our target is to reach Rs 11,000-12,000 crore total assets over the next two years.”

The old generation private bank based in Tamil Nadu is planning to open 70 branches of which 50 per cent would come up in southern states. Currently, it has a branch network of 208.

The board of directors at its meeting held on June 30, 2009, gave its approval to raise 300 crore through QIP.

Meanwhile, the bank is planning to recruit around 700 people to support its expansion. Kamakodi said, “as a thumb rule to operate a branch we need 10 people.” Currently, the bank employs around 3,000 people.

On whether the bank will look at entering foreign countries, Kamakodi said, “Options are open, we will take some more time”. CUB reported a 32 percent drop in net profit to Rs 122.13 crore for 2008-09 from Rs 180.15 crore in 2007-08. Total income rose to Rs 366.25 crore, up from Rs 290.06 crore a year before.