Govt may raise stake in Union Bank to 60%

Union Bank of India on Thursday said it was expecting the government’s stake to rise to 60 per cent after a capital infusion of Rs 1,500 crore.

The lender has sought Rs 1,500 crore from the government. Of this, Rs 111 crore has already been given as perpetual non-cumulative preference shares. The finance ministry has given an in-principle approval for the second fund infusion.

“It is up to the government to decide how much to give… We hope the decision on capital infusion will be announced before March,” Chairman and Managing Director MV Nair told reporters at the bank’s 92nd foundation day here.

Nair said once the government holding in the bank went up from the current 55 per cent to 60 per cent, it would be easier to go for a rights issue and raise capital by diluting the government’s stake.

He said the bank had headroom to raise Rs 4,500 crore through Tier-II bonds. “On Thursday, our capital adequacy is good. We have sufficient room for Tier-II capital. We can raise it anytime,” he said. The bank will also raise $175 -$200 million through medium-term notes in the next one month. It had raised $400 million in August.