CUB to raise Rs 1,000 cr

City Union Bank (CUB) is planning to raise around Rs 1,000 crore over the next three years through qualified institutional placement (QIP). The bank has already received approval from its board to raise Rs 300 crore and is planning to seek approval for another Rs 700 crore.

After announcing bank’s results here, N Kamakodi, executive director, CUB, said the bank had set a business target of Rs 22,000 crore for the current fiscal and Rs 50,000 crore by 2013-14. “To support this target, we need another Rs 1,000 crore, which will be raised from both domestic and foreign institutions by way of QIP.”

In September last, the board had given its approval to raise Rs 300 crore, which was not utilised and negotiations are on with the investors, said Kamakodi. “We will go back to the board to seek another set of approval to raise the balance Rs 700 crore,” he added.

“If we have to grow at a rate of 30 per cent, we have to increase our capital over three years,” he said. In the last three years the bank had raised Rs 200 crore through rights issue and preferential allotments.

The Kumbakonam-based private bank closed the year ended March 31 with a net profit of Rs 152.76 crore as compared with Rs 122.13 crore, an increase of 25.08 per cent. “We are posting profit continuously for the last 100 years,” Kamakodi noted.

For the year 2010-11, the bank has set a profit target of Rs 210 crore.

As part of its expansion plans, the bank is planning to open 56 branches, for which it got approval from the Reserve Bank of India this fiscal. Currently, it has 222 branches, mainly in Tamil Nadu. One third of the new branches will come up in Tamil Nadu, with the rest will be spread out in other parts of the country. The bank is planning to add 550 employees this year.

On merchant banking plans, Kamakodi said they were yet to receive nod from the regulator. CUB had signed an MoU with Colombo-based Hatton National Bank in 2008. “Both the regulators have not given approval,” he added.