UBI plans to raise up to Rs 1,000 crore via QIP, rights issue

This is in addition to Rs 575 crore it aims to raise by issuing equity shares on a preferential basis to the government and LIC

United Bank of India (UBI), which scripted a turnaround by returning to profitability in January-March quarter, plans to raise up to Rs 1,000 crore either through a qualified institutional placement (QIP) or a rights issue.

This is in addition to Rs 575 crore it aims to raise by issuing equity shares on a preferential basis to the government and the Life Insurance Corporation (LIC) of India. The state-run lender has sought shareholders' approval to raise this money at its annual general meeting (AGM) here today. The move is expected to improve UBI's capital adequacy ratio.

The bank had closed last financial year with a capital adequacy ratio of 9.81 per cent as per Basel III rules.UBI earned a net profit of Rs 469 crore for the quarter ended March, 2014, after reporting losses in the previous two quarters. The bank's senior management remained confident that it will continue to improve its earnings performance incoming quarters by building its low-cost deposit base, growing its retail advances and recovering money from non-performing loan accounts.

"2013-14 was the year of contrast for all of us in United Bank of India. It was a roller-coaster ride all through, where we have witnessed our organisation attaining highs before falling to historic lows...The year ahead is going to bea year of consolidation, resurrection and revival wherein the thrust shall continue to be on monitoring, recovery and capital formation," Sanjay Arya, executive director of UBI, told shareholders.

The chairman's post in UBI has been lying vacant since Archana Bhargava resigned as chairperson of the bank in February, 2014. Arya and Deepak Narang (the other executive director of the bank) has been in charge of UBI since then.

The government is yet to name a new chairman for the bank.